Hey, thanks for the report. This is a known issue with handling apostrophes in paths on Windows.
Workaround: rename your project folder and remove the apostrophe from the name (for example, “Test’s Work” → “Tests Work”). After that, the Agent terminal should work.
We’ve reported this bug to the dev team: Terminal Parsing Issues With Apostrophes In Paths
This happens because Cursor uses internal PowerShell wrapper scripts to run Agent commands, and they don’t escape apostrophes in paths correctly.