This is a known class of bugs with model parameter persistence. When you open a new folder, the initial chat tab loads your saved “high” preference from disk, but the backend model catalog response arrives a moment later and overwrites it with the default. That’s why it briefly shows “high” then snaps to “medium.” Subsequent tabs work because the catalog is already cached by then.
Several fixes have shipped in this area over recent months, but this specific “new folder open” race condition still persists on your version. Our team is aware and actively working on model picker state reliability.
You may also find this related thread helpful: Cursor disregarding model effort/thinking settings after restart
For now, the workaround is to open a new chat tab after opening a folder (which you’ve already noticed works correctly). We’ll keep tracking this.