Kimi K2.7 consistently fails with Server Error 500 in VS Code Copilot local session side chat

## Bug description

The Kimi K2.7 model does not work in the GitHub Copilot Chat side panel in VS Code in local session.

This has been happening consistently for approximately five days. The same model and account work successfully in other Copilot surfaces:

- GitHub Copilot CLI: works
- Kimi K2.7 used as a subagent: works
- VS Code Agents window: works
- VS Code Copilot Chat side panel (Copilot session): works
- VS Code Copilot Chat side panel (Local session): fails consistently

The failure occurs regardless of the request or conversation.

## Steps to reproduce

1. Open VS Code.
2. Open the GitHub Copilot Chat side panel.
3. Choose "Local" session delegation
4. Select the Kimi K2.7 model.
5. Send any request.
6. Observe the error.
## Actual behavior

Every request fails with:

The affected entry point is the GitHub Copilot Chat side panel in VS Code: reproduce the failure by selecting Local and Kimi K2.7, then compare it with the listed working surfaces. Use the recurring Server Error 500 and the session/model combination to locate the failing path; done means requests succeed in that Local session without affecting the working surfaces.

Written by the indexing model from the issue text.