Devcontainer initialization fails when VS Code extensions are unavailable - blocks development setup

Bug Reports
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:lady_beetle: Bug Description:
When using devcontainer with Podman in Cursor, if devcontainer.json includes VS Code extensions that are not available in Cursor (e.g., GitHub.copilot-chat, ms-toolsai.datawrangler), the container initialization process fails completely instead of skipping the unavailable extensions.

This is a critical issue as it completely blocks the devcontainer initialization process and prevents the development environment from being set up.

:counterclockwise_arrows_button: Steps to Reproduce:

  1. Create a devcontainer.json with VS Code extensions
  2. Include extensions that exist in VS Code but not in Cursor (e.g., GitHub.copilot-chat)
  3. Configure environment to use Podman as container runtime
  4. Try to open the project in Cursor with devcontainer

Expected behavior:

  • Container should continue initialization even if some extensions fail to install
  • Unavailable extensions should be skipped with a warning

Actual behavior:

  • Container initialization stops when encountering unavailable extensions
  • postCreateCommand and other initialization steps are not executed
  • Development environment becomes unusable

:laptop: Environment:

  • OS: Windows 10.0.22631
  • Cursor Version: [Please add your Cursor version]
  • Container Runtime: Podman

:prohibited: Impact:
Yes, this issue completely stops us from using Cursor with our devcontainer setup. It blocks teams from using existing VS Code devcontainer configurations in Cursor, especially when the configurations are shared between VS Code and Cursor users.

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