Hey, this is a known issue with the extension host on Windows. The cursor-socket folder is missing the out/ directory, so the extension host keeps crashing in a loop. The Chat error in Network Diagnostics is just a side effect of that crash.
You said xcopy didn’t help. Let’s make sure the command was run correctly. If you have a user setup install, the path should be:
cd "%LOCALAPPDATA%\Programs\cursor\resources\app\extensions\cursor-socket"
xcopy dist out\ /E /I
Open Command Prompt as administrator, run both commands, then fully close and reopen Cursor.
If the first command says path not found, Cursor might be installed as a system setup:
cd "C:\Program Files\cursor\resources\app\extensions\cursor-socket"
xcopy dist out\ /E /I