Connection failed... when checking out background agents locally

Describe the Bug

This seems consistent. I’m unable to use Cursor after checking out a bg agent locally.

Steps to Reproduce

Slack Agent do a thing. Thing is done, Open in Cursor.
Background agent loads, click checkout locally.

Any new follow-up commands state: Connection failed. If the problem persists, please check your internet connection or VPN

Operating System

Windows 10/11

Current Cursor Version (Menu → About Cursor → Copy)

1.1.6 Windows + WSL

Additional Information

Agent works fine within the BG agent

Does this stop you from using Cursor

Yes - Cursor is unusable