Hierarchical Order of mcp loading. Bug / feature

- Copilot Chat Extension Version: Latest
- VS Code Version: Latest, insider
- OS Version:
- Feature (e.g. agent/edit/ask mode):
- Selected model (e.g. GPT 4.1, Claude 3.7 Sonnet):
- Logs:

Bug that is related to copilot workflow, but happens in the visual studio code.

During the load of a new-agent, specifically trying to bundle a MCP.json, or double mcp server, the cascade loading ( which was working in prev version, seems a regression ) disappeared.

I'm importing a plugin.

Now vscode is defaulting to the first MCP close to the agent. My plugin folder has many mcp servers, and one is specifically for vscode. Previously all mcp servers would load.

May or may not be related with https://github.com/microsoft/vscode/issues/333995

Picture 1 - The plugin folder, self-importing, in the same workspace of the plugin

Picture 2 - The plugin folder doesn't run when imported in a different environment , with different workspace.

Picture 3 - the plugin is correctly blunded and the vscode imports all.

Picture 4 - Vscode can't recognize the other mcp servers as the picture 5 recognizes.

Picture 5 - Adding the plugin to the workspace does fix the issue, and the 3 mcp options appear again

Steps to Reproduce:

1. Put a .vscode with a .mcp
2. put a .mcp in the folder
3. create an agent in the main folder
4. Bundle a plugin
5. Import the plugin in a different workspace / user
6. check the collision