I had this issue today, and I think I figured out what was it causing it, at least for me. It’s an issue with Windows Security. Windows Security recently prompted me to update my settings for “App & Browser Control” and when I clicked “Turn On”, that’s when the issue seemed to happen.
To fix it, I went to “Windows Security” → “App & Browser Control” → “Reputation-based Protection Settings” and turned off “Check Apps and Files” and “Potentially Unwanted App Blocking”, and then it started working fine for me.
For the Cursor team, I would suggest looking into why Windows flags Cursor as a potentially unwanted app. @danperks