Just a quick update on what fixed this for me: I didn’t end up finding the actual culprit but I went with the nuclear option of blowing away my Cursor install by deleting the application file in MacOS Applications and doing:
rm -rf ~/Library/Application\ Support/Cursor
rm -rf ~/Library/Preferences/com.cursor.app.plist
This solved it for me and Cursor is running waaaaaay faster now. Presumably it had something to do with logs getting too long or developing a massive context window that was slowing everything down, or an extension that was messing something up. Anyways I have a fresh install of Cursor and it’s blazing fast again and it’s able to search and read files with no timeout issues. HTH