Local MCP server in VS Code stops working & “Registry” lock becomes editable from v1.109.2+ #956
Description
Describe the bug
After updating to VS Code v1.109.2 (and above), our locally hosted MCP server (used via VS Code) stopped working despite no config changes. Additionally, a previously locked “Registry” setting (maintained by org policy) is now user-editable, which breaks our managed configuration and allows users to switch away from the organization registry.
This worked as expected in prior versions: the MCP server connected and the registry setting was enforced/locked by policy.
This appears to be a regression introduced in v1.109.2+.
To Reproduce
Steps to reproduce the behavior:
Install/update VS Code to v1.109.2 or later.
Use a workstation where org policy enforces the MCP Registry setting (previously locked).
Open a workspace with a local MCP server configured (see example config).
Observe:
Registry setting is now editable.
Local MCP does not initialize/connect (features relying on MCP fail).
Downgrade VS Code to a pre‑1.109.2 version.
Observe:
Registry setting returns to locked.
Local MCP connects/works again.
Expected behavior
VS Code connects to the local MCP server as before.
The MCP Registry setting remains locked (read-only) per org policy and is not editable by end users.
Logs
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Additional context
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