PowerShell extension behaving unexpectedly on VS Code (v1.85.1)

[1-ManArmy]

Prerequisites

• I have written a descriptive issue title.
• I have searched all open and closed issues to ensure it has not already been reported.
• I have read the troubleshooting guide.
• I am sure this issue is with the extension itself and does not reproduce in a standalone PowerShell instance.
• I have verified that I am using the latest version of Visual Studio Code and the PowerShell extension.
• If this is a security issue, I have read the security issue reporting guidance.

Summary

I am experiencing a problem with the PowerShell extension in Visual Studio Code. This issue should not be happening, but it is. PowerShell scripts are not executing as expected or there are unexplained behaviors while using the extension.

PowerShell Version

Name                           Value
----                           -----
PSVersion                      7.5.2
PSEdition                      Core
GitCommitId                    7.5.2
OS                             Microsoft Windows 10.0.19045
Platform                       Win32NT
PSCompatibleVersions           {1.0, 2.0, 3.0, 4.0…}
PSRemotingProtocolVersion      2.3
SerializationVersion           1.1.0.1
WSManStackVersion              3.0

Visual Studio Code Version

1.102.3
x64

Extension Version

ms-vscode.powershell@2025.2.0

Steps to Reproduce

Open VS Code

Open a PowerShell script (.ps1)

Run the script or execute a command

Observe unexpected or buggy behavior (e.g., output not appearing, hangs, etc.)

Visuals

No response

Logs

2025-08-06 21:49:56.637 [info] Visual Studio Code: v1.102.3 64-bit on Windows 64-bit
2025-08-06 21:49:56.637 [info] PowerShell Extension: v2025.2.0
2025-08-06 21:49:57.596 [info] Starting 'PowerShell (x64)' at: C:\Program Files\PowerShell\7\pwsh.exe
2025-08-06 21:50:00.052 [info] PowerShell process started with PID: 32512
2025-08-06 21:50:13.189 [warning] PowerShell process terminated or Extension Terminal was closed, PID: 32512
2025-08-06 21:50:13.216 [error] Extension Terminal is undefined.
2025-08-06 21:50:21.540 [error] PowerShell Language Server process didn't start!

No response