Got the same bugs on version 2.1.50 (WSL).
It goes beyond the model failing to use the terminal (exit code 0, no output); it also breaks the auto-apply feature, forcing manual approval everytime.
It seems to happen specifically in workspaces with a heavy chat history/large database.
To fix the problem I deleted the project’s folder located in %APPDATA%\Cursor\User\workspaceStorage. It looks like the database gets corrupted or something. But this solution clears the chat history which is not satisfying.
Don’t know yet if the bug can happen again after cleaning the data.