Agents Window: MCP Server with Authentication are not available in Agents Window

Copilot Chat Extension Version: 0.56.0
VS Code Version: 1.128.0
OS Version: Windows 10 Enterprise 25H2 (Build 26200.8655)

Duplicate of #319578 which is closed as resolved in 1.125 but issue still exists. This maybe provides some additional information.

Steps to Reproduce:

1. Install a remote MCP server which requires authentication like Azure Dev Ops (https://github.com/microsoft/azure-devops-mcp) or balsamiq in .vscode/mcp.json in workspace
2. Test mcp in sidebar chat window, should require authentication
3. Open Agents window (I use the button in titlebar)
4. MCP server is in the moment shown in customization area
5. Try to use MCP server, mcp is now unknown and no longer shows in customization area

VS Code global logs do contain Balsamiq MCP issues:
C:\Users\gbegerow\AppData\Roaming\Code\logs\20260708T154652\window3\renderer.log
Server 'mcp.config.ws0.balsamiq' failed to start Collection or definition not found for mcp.config.ws0 and mcp.config.ws0.balsamiq
same warning also in ...\window2\renderer.log
plus repeated connection/stream errors in
...\20260708T160627\window1\mcpServer.mcp.config.ws0.balsamiq.log (Error reading from async stream..., Error connecting to https://bais.balsamiq.com/mcp...).