Terminal: allow PowerShell 7.4+ constrained language audit mode to work with shell integrations

[skbtwiz]

Fixes #283151

Description

PowerShell 7.4 introduced Constrained Language Audit Mode, where $ExecutionContext.SessionState.LanguageMode reports ConstrainedLanguage but runtime behavior is equivalent to FullLanguage Mode. This is intended only for logging what would be blocked were ConstrainedLanguage mode actually being enforced seriously.

The PowerShell VSCode shell integration guard currently aborts unless LanguageMode == FullLanguage. This logic predates the existence of audit-only constrained language mode and was correct for its time. Presently however, it falsely blocks the shell integration from working in audit scenarios, even though PowerShell execution is fully functional.

This change updates the guard to allow shell integration when:

• LanguageMode == FullLanguage, or
• LanguageMode == ConstrainedLanguage and system lockdown policy is Audit

Enforced constrained language mode continues to be blocked.

Why this change is safe

• Audit CLM is explicitly non-restrictive by design
• Enforced CLM behavior remains unchanged
• Backward compatible with all older PowerShell versions
• No elevation or system configuration changes required
• Uses PowerShell’s official SystemPolicy.GetSystemLockdownPolicy() API

How to test

Audit CLM scenario

1. On Windows 11, enable a WDAC / App Control audit-only policy
2. Install PowerShell 7.4+. If step 1 went correctly, pwsh should be in ConstrainedLanguage Audit Mode
3. Open VS Code
4. Open the integrated terminal using pwsh
5. Verify shell integration initializes correctly (prompt tracking, command boundaries)

Enforced CLM scenario

1. Enable an enforced WDAC / App Control policy
2. Open the integrated terminal using pwsh
3. Verify shell integration does not initialize

Baseline

• Windows PowerShell 5.1 (FullLanguage) continues to work unchanged because it is too old to understand Audit Mode.

Notes

The original language mode guard was introduced in #158548 and was correct at the time. This change adapts that logic to newer PowerShell semantics introduced in 7.4 without weakening security guarantees.

[skbtwiz]

@microsoft-github-policy-service agree

[Tyriar]

@andyleejordan could you review this when you get a chance? 🙏

[skbtwiz]

Hi @andyleejordan, just adding a bit of context for visibility.

Although this PR is small, the guard ends up affecting a growing set of VS Code–derived IDEs on Windows that depend on PowerShell’s rich terminal integration for agentic / AI-driven workflows. As audit-only App Control and PowerShell 7.4+ become more common on developer machines, the behavior increasingly shows up across that broader ecosystem.

No urgency implied, just wanted to surface the scope for triage.

[andyleejordan]

We are looking at it @skbtwiz! Pulling in @daxian-dbw who knows much more about this area.

[daxian-dbw]

LGTM!