🐞 Bug Report — Dev Container Fails to Mount Workspace and Never Finishes Connecting

**Repository:** Private enterprise organization repository

**Environment:** macOS (Docker Desktop)

**VS Code Version:** 1.104.3 (Universal)

* **Commit:** 385651c938d-f8a906869babee516bffd0ddb9829
* **Date:** 2025-10-02T12:30:51.747Z (1 week ago)
* **Electron:** 37.3.1
* **Chromium:** 138.0.7204.235
* **Node.js:** 22.18.0
* **V8:** 13.8.258.31-electron.0
* **OS:** Darwin arm64 24.6.0

**Dev Containers Extension:** 0.427.0 (last updated 2025-10-01, 15:39:55)
**Docker Desktop Version:** 4.43.2 (199162)
**Docker Engine Version:** *latest stable on macOS*
**File Sharing Mode:** gRPC FUSE

---

#### **Description**

After creating a new repository using the official [devcontainers/template-starter](https://github.com/devcontainers/template-starter) template and opening it in Visual Studio Code, the Dev Container build completes successfully but never finishes connecting. The VS Code Explorer remains empty, showing no filesystem content. The Dev Containers log shows that the container starts with an ephemeral command (`echo Container started`) and exits immediately.

This behavior occurs on a clean installation with no local customizations.

The template repository was generated from the latest commit (`67a45f0`) on the `main` branch of [devcontainers/feature-starter](https://github.com/devcontainers/feature-starter).

---

#### **Expected Behavior**

* The workspace folder (`/workspaces/devcontainer-features`) should be mounted and visible in VS Code Explorer after container startup.
* VS Code should attach to the running container automatically.
* The container should remain active for development tasks.

---

#### **Actual Behavior**

* The container starts and exits immediately after printing `Container started`.
* The VS Code status bar remains stuck on **"Connecting to Dev Container…"**.
* The workspace file tree never appears in the Explorer.

---

#### **Relevant Log Snippet**

```
[2745 ms] Start: Run: docker run --sig-proxy=false -a STDOUT -a STDERR \
--mount type=bind,source=/Users//Documents/GitHub/devcontainer-features,target=/workspaces/devcontainer-features,consistency=cached \
--mount type=volume,src=dind-var-lib-docker-...,dst=/var/lib/docker \
--mount type=volume,src=vscode,dst=/vscode \
-l devcontainer.local_folder=/Users//Documents/GitHub/devcontainer-features \
-l devcontainer.config_file=/Users//Documents/GitHub/devcontainer-features/.devcontainer/devcontainer.json \
--privileged \
--entrypoint /bin/sh vsc-devcontainer-features-...-features \
-c echo Container started
```

After this message, the container exits and VS Code cannot attach.

---

#### **Steps to Reproduce**

1. Use the [devcontainers/template-starter](https://github.com/devcontainers/template-starter) to create a new private repository in an enterprise organization.
2. Open the repository in VS Code.
3. Run **Dev Containers: Reopen in Container**.
4. Wait for the build to complete.
5. Observe that VS Code remains stuck on “Connecting to Dev Container…” and no workspace files are visible.

---

#### **devcontainer.json**

```json
{
"image": "mcr.microsoft.com/devcontainers/javascript-node:1-20-bookworm",
"customizations": {
"vscode": {
"extensions": ["mads-hartmann.bash-ide-vscode"]
}
},
"features": {
"ghcr.io/devcontainers/features/docker-in-docker:2": {}
},
"remoteUser": "node",
"updateContentCommand": "npm install -g @devcontainers/cli"
}
```

---

#### **Impact**

This issue blocks initial onboarding and testing of the Dev Container Features template. The container never becomes interactive, preventing any local development or feature publishing.

---

#### **Expected Outcome**

A freshly generated repository from the official Dev Containers template should open in VS Code, connect successfully, and mount the workspace without requiring manual edits or additional configuration. The `devcontainer` cli should be accessible from the terminal inside of the devcontainer.

---

#### **Additional Notes**

* Occurs consistently on macOS (Apple Silicon) with the latest VS Code and Docker Desktop.
* Docker Desktop is configured to use **gRPC FUSE** for file sharing.
* No organizational policy or workflow permission issues are involved in this case.
* Reproducible immediately after generating the repository from the GitHub template.