Agent does not change its working directory when asked

### Description

The agent does not change its current working directory when explicitly asked to do so, although this behavior was shown working in a recent demo.

### Steps to reproduce

1. Open the agent in a recent VS Code Insiders build.
2. Ask the agent to change its current working directory.
3. Observe that the working directory does not change.

### Expected behavior

The agent changes its current working directory to the requested directory.

### Actual behavior

The agent does not change its current working directory.

### Environment

- VS Code Insiders build: `046944`
- Telemetry: disabled
- Experiments: disabled

### Additional context