Hey, thanks for the detailed report.
This is a known issue. debug.toolBarLocation: commandCenter isn’t working correctly in Cursor right now. The team is aware, but there’s no ETA for a fix yet.
There’s also a related thread about similar debug panel issues in 2.6.20: Run and Debug controls missing from Run and Debug panel in 2.6.20
For now, the only workaround is to use "debug.toolBarLocation": "floating" or "docked", which you already found.