FWIW the current community understanding is that this is a back end issue and not related to downgrading to the previous IDE version.
Thread worth reading: Apply seems to be broken?
I’ve downgraded to the previous version and it’s made little difference, many of the challenges seem the same. Judging by the high number of similar posts made on the forum in the last couple of days, I’m hopeful that the Cursor team are aware and working on solving it.