The bug is that the Cursor agent will not acknowledge or use MCP servers on the SSE transport served on high number ports.
The Cursor MCP Settings page says that my server is set up properly and the metadata about the tools is even being shown correctly when I hover over the tool name.
I have also verified through the MCP Inspector on the same host that I am using cursor that the server is accessible, is properly listing out all its tools and is executing tool calls correctly.
Cursor correctly uses the tools from the same server running on a low number port like 6500. When I spin up the server on a port such as 32823, it is unable to recognize when a tool call should occur. I used the same prompt on a fresh chat in both cases. I repeated this multiple times where the low port number had successful tool calls but the high port number did not.