ExtensionDependencies cascade error fires despite capabilities.untrustedWorkspaces.supported: false being explicitly declared

Type: Bug

Does this issue occur when all extensions are disabled?: Yes/No

ModusToolobox for VSCode Extension declares capabilities.untrustedWorkspaces.supported: false explicitly and will still attempt to activate extension and create toast popup error.

That's an unambiguous contract violation. VS Code's documentation says a supported: false extension "will remain disabled" in Restricted Mode. It didn't.

Steps to Reproduce:
When opening an untrusted workspace via vscode.openFolder from an active extension in a trusted source workspace, VS Code fires the extension's onStartupFinished activation event in the target workspace and displays "Cannot activate ... not supported in Restricted Mode" — despite the extension having explicitly declared it does not support untrusted workspaces and should therefore not be activated at all.

- VS Code Version: 1.31.1

VS Code version: Code 1.131.0 (e4c7e7b1d6d060162f4aa7f8225271b67ce1df75, 2026-07-28T10:51:25Z)
OS version: Windows_NT x64 10.0.26200
Modes:

Extensions (19)

Name|Identifier|Author|Version
---|---|---|---
Arm Assembly|dan-c-underwood.arm|dan-c-underwood|1.7.4
GitLab|gitlab.gitlab-workflow|GitLab|6.85.5
Infineon ModusToolbox™ AI Assistant|infineonag.modustoolbox-ai|InfineonAG|0.2.1
Infineon ModusToolbox™ for VS Code|infineonag.modustoolbox-for-vscode|InfineonAG|1.8.0
Peacock|johnpapa.vscode-peacock|johnpapa|4.3.4
clangd|llvm-vs-code-extensions.vscode-clangd|llvm-vs-code-extensions|0.6.0
Cortex-Debug|marus25.cortex-debug|marus25|1.12.1
debug-tracker-vscode|mcu-debug.debug-tracker-vscode|mcu-debug|0.0.15
MemoryView|mcu-debug.memory-view|mcu-debug|0.0.29
Peripheral Viewer|mcu-debug.peripheral-viewer|mcu-debug|1.6.1
RTOS Views|mcu-debug.rtos-views|mcu-debug|0.0.16
Python Debugger|ms-python.debugpy|ms-python|2026.6.0
Python|ms-python.python|ms-python|2026.4.0
Pylance|ms-python.vscode-pylance|ms-python|2026.3.1
Python Environments|ms-python.vscode-python-envs|ms-python|1.36.0
CMake Tools|ms-vscode.cmake-tools|ms-vscode|1.23.52
C/C++ DevTools|ms-vscode.cpp-devtools|ms-vscode|0.5.13
C/C++|ms-vscode.cpptools|ms-vscode|1.33.6
C/C++ Extension Pack|ms-vscode.cpptools-extension-pack|ms-vscode|1.5.1

A/B Experiments

```
vsliv368:30146709
binariesv615:30325510
nativeloc1:31344060
dwcopilot:31170013
dwoutputs:31242946
copilot_t_ci:31333650
e5gg6876:31282496
pythonrdcb7:31342333
6518g693:31463988
aj953862:31281341
envsactivate1:31551504
cloudbuttont:31379625
42190218_ostrepl:31403339
ec5jj548:31422691
pandia-0014-2-1000-2in1-med-kld:31558767
cp_cls_t_966_ss:31526232
4je02754:31466945
c3h7c220:31478652
ge8j1254_inline_auto_hint_haiku:31490510
cp_cls_t_1081:31454832
conptydll_true:31498968
e9c30283:31461165
test_control1:31471004
c9b86496:31447327
capico_axe_098a3278:31555651
idci7584:31464702
e3e4d672:31494082
ei9d7968:31496641
nes-extended-on:31455476
chat:31457767
8hig5102:31480529
89g7j272:31518289
7e187181:31503455
i2gc6536:31499202
52612955:31516516
ghj88844:31499326
ddid_t:31478206
hmra_i5g22:31518061
7df3h592:31512476
cp_cls_t_1082:31535311
logging_enabled_new:31498466
db5d2638:31499441
jb_cp_cls_t_632:31543129
748c7209:31512887
32d76977:31512328
ha629193:31508444
cdk-lw-on:31524445
f9bf7985:31543584
a1ije391_t:31540920
hgf2d445:31529595
8hfba999:31537718
jbcp_cls_pctr_t:31531130
61138546:31518536
cp_intellij_t_nes:31548657
jf4hg949:31526829
nes-curr-leftover-1500:31538366
ahp-both-windows:31556933
h561g132:31533256
session_8:31532895
hjji5903:31534458
f412h606:31551416
9gg7f176:31542112
5fe6f778:31554331
allow-none:31555437
fd5dc207:31551400
c7c27ce7:31554789
nes-gb3-nf-4k:31554344
8hc4g144:31558143
0dg73464:31554319
treatment-23-1:31555779
unuse_dynamic_mcp:31555281
0d8dfbc3:31560381
switchtoauto:31559321
vrbsty_fls:31561059
session-mark-done:31558131

```