Code-Server bug where it says "Terminal output not available" even though it works on Kilo Code

Before submitting your bug report

• I've tried using the "Ask AI" feature on the Continue docs site to see if the docs have an answer
• I believe this is a bug. I'll try to join the Continue Discord for questions
• I'm not able to find an open issue that reports the same bug
• I've seen the troubleshooting guide on the Continue Docs

Relevant environment info

- OS: Ubuntu (Windows 11 for the client)
- Continue version: v1.2.2
- IDE version: code-server 4.19.0 984fb135dc0baa822f8031f1c639b1fd953a6291 with Code 1.84.2
- Model: anthropic.claude(rest of model version goes here)
- config:
  
name: "My Continue Assistant"                                                                                                                                                                                                        
version: "1.0.0"                                                                                                                                                                                                                     
schema: "v1"                                                                                                                                                                                                                         
                                                                                                                                                                                                                                     
models:                                                                                                                                                                                                                              
  - name: "Claude Sonnet"                                                                                                                                                               
    provider: "bedrock"                                                                                                                                                                                                              
    model: "anthropic.claude(insert version here, I confirmed it's supported)"                                                                                                                                                                                                                                                                                                                                                                                      
    roles:                                                                                                                                                                                                                           
      - chat                                                                                                                                                                                                                         
      - edit                                                                                                                                                                                                                         
      - apply                                                                                                                                                                                                                        
      - summarize                                                                                                                                                                                                                    
                                                                                                                                                                                                                                     
context:                                                                                                                                                                                                                             
  - name: "code"                                                                                                                                                                                                                     
    provider: "code"                                                                                                                                                                                                                 
  - name: "folder"                                                                                                                                                                                                                   
    provider: "folder"                                                                                                                                                                                                               
  - name: "codebase"                                                                                                                                                                                                                 
    provider: "codebase"  
  
  OR link to agent in Continue hub:

Description

So the issue is when I try to have it run terminal commands I get this error in Code-Server:
"Terminal output not available. This is only available in local development environments and not in SSH environments for example."
I reached out to the code-server folks and they confirmed it is not an error on their end, but the Continue extension. Also I was able to confirm that there is a working solution, Kilo Code implements some kind of integration with the terminal that works on code-server.

To reproduce

1. Install Code-Server, any Linux distro should work.
2. Install the Continue extension and integrate it with any LLM
3. Tell that LLM to run a terminal command (e.g. find .) and tell the output
4. Approve the terminal command to be ran
5. See the following error: "Terminal output not available. This is only available in local development environments and not in SSH environments for example."

Log output

Let me know if you need additional logs, but I think this one that error message should be good enough.