Great, that confirms the issue. Terminal v3 can’t create a session, so every command ends up timing out. The same error showed up in this thread, and it was fixed in two different ways.
Since you don’t have MCP set up, let’s try this step by step:
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Legacy Terminal Tool
This is the fastest way to bypass v3 right now. Open Cursor SettingsCMD+Shift+J> Agents > enable Legacy Terminal Tool. Then runCMD+Shift+P>Terminal: Kill All Terminals, fully restart Cursor, and try again. Legacy uses the older mechanism and doesn’t depend on the v3 health check. -
Clean zsh profile
If Legacy doesn’t help, temporarily rename~/.zshrcto~/.zshrc.bakand restart Cursor. Some plugins (oh-my-zsh, powerlevel10k, etc.) can conflict with terminal capture. In that thread, this is what fixed it for one user. -
No extensions
Runcursor --disable-extensionsfrom your normal terminal, open the project, and test again.
Let me know which step worked (or didn’t), and we’ll dig in further.