Background agent setup fails to connect to the remote extension host server

[Jongseung_Lim]

Describe the Bug

When I try to setup the background agent, it fails to connect to the spawned workspace.

With error:
Failed to connect to the remote extension host server (Error: [not_found] Error)

Steps to Reproduce

Start background agent setup with default settings, and wait for the ubuntu instance to launch.

Then once the instance is ready, the connecting to the workspace fails.

Expected Behavior

The setup window should connect to the workspace.

Screenshots / Screen Recordings

Operating System

MacOS

Current Cursor Version (Menu → About Cursor → Copy)

Version: 1.1.6
VSCode Version: 1.96.2
Commit: 5b19bac7a947f54e4caa3eb7e4c5fbf832389850
Date: 2025-06-25T02:14:24.784Z (1 day ago)
Electron: 34.5.1
Chromium: 132.0.6834.210
Node.js: 20.19.0
V8: 13.2.152.41-electron.0
OS: Darwin arm64 24.5.0

Does this stop you from using Cursor

No - Cursor works, but with this issue

[raythurnvoid]

Yes having the same issue.

The bg agent works but since the setup is dead i have to configure the env for every bg agent

[Robin_Obermaier]

getting the same error right now. I have previously set up a background agent on another repo and it worked without problems.