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

• VS Code Version: 1.102.0 (user setup)
  Commit: cb0c47c
  Date: 2025-07-09T22:10:34.600Z
  Electron: 35.6.0
  ElectronBuildId: 11847422
  Chromium: 134.0.6998.205
  Node.js: 22.15.1
  V8: 13.4.114.21-electron.0
• OS Version: Windows_NT x64 10.0.26100

Steps to Reproduce:

1. Open in Visual Studio Code an empty dir
2. In terminal:
   npm install @playwright/test
   npm install -D ts-node
3. Add in root level tsconfig.json with content:
   {
   "compilerOptions": {
   "sourceMap": true,
   "target": "ES2022",
   "module": "CommonJS",
   "rootDir": "./src", // where your .ts lives
   "outDir": "./dist", // where .js will be emitted[5][8]
   "strict": true,
   "esModuleInterop": true,
   "skipLibCheck": true
   },
   "include": ["src/**/*"] // files to compile
   }
4. Create "src" dir in root location in a directory.
5. In "src" dir create index.ts with a content:

 ```typescript 
import { chromium, firefox, webkit, Browser } from 'playwright';

async function launchAndNavigate(browserType: 'chromium' | 'firefox' | 'webkit', url: string) {
  // 1. Launch the specified browser
  const browser: Browser = await { chromium, firefox, webkit }[browserType].launch({
    headless: false,           // set to true to run headless
    slowMo: 50,                // slows down actions by 50ms
  });

  // 2. Create a new browser context (isolated session)
  const context = await browser.newContext();

  // 3. Open a new page
  const page = await context.newPage();

  // 4. Navigate to the target URL
  await page.goto(url);

  console.log(` ${browserType} launched and navigated to ${url}`);

  // 5. Keep browser open until manual close
  //    You can add interactive prompt here or simply wait:
  await page.waitForTimeout(10_000); // waits 10 seconds

  // 6. Close browser
  await browser.close();
}

(async () => {
  try {
    // Change browserType or URL as desired
    await launchAndNavigate('chromium', 'https://example.com');
  } catch (error) {
    console.error('Error launching browser:', error);
    process.exit(1);
  }
})();

async function run() {
      try {
    // Change browserType or URL as desired
    await launchAndNavigate('chromium', 'https://example.com');
  } catch (error) {
    console.error('Error launching browser:', error);
    process.exit(1);
  }
};

run();
``` 

6. Compile all:
   npx tsc

7. Open "Source Control" Ctrl + Shift + G

8. Click "Initialize Repository"

Actual incorrect behaviour:

1. Git tree cannot be displayed/initialized.
2. Such processes are executed (in a left bottom part of VS Code):

• Initializing 'tsconfig.json'
• Python extension loading...
• Initializing 'tsconfig.json'
• Initializing ESLint Server
• Initializing 'tsconfig.json'
• Reactivating terminals...

and such errors appears in Output -> Window:
2025-07-14 19:04:25.870 [error] [Window] [Extension Host] Failed to register Continue config.yaml schema, most likely, YAML extension is not installed CodeExpectedError: Unable to write to User Settings because yaml.schemas is not a registered configuration.
at uyt.z (vscode-file://vscode-app/c:/Users/myUsername/AppData/Local/Programs/Microsoft%20VS%20Code/resources/app/out/vs/workbench/workbench.desktop.main.js:3360:6793)
at uyt.F (vscode-file://vscode-app/c:/Users/myUsername/AppData/Local/Programs/Microsoft%20VS%20Code/resources/app/out/vs/workbench/workbench.desktop.main.js:3360:9281)
at uyt.o (vscode-file://vscode-app/c:/Users/myUsername/AppData/Local/Programs/Microsoft%20VS%20Code/resources/app/out/vs/workbench/workbench.desktop.main.js:3360:3874)
at Object.factory (vscode-file://vscode-app/c:/Users/myUsername/AppData/Local/Programs/Microsoft%20VS%20Code/resources/app/out/vs/workbench/workbench.desktop.main.js:3360:3774)
at Sv.j (vscode-file://vscode-app/c:/Users/myUsername/AppData/Local/Programs/Microsoft%20VS%20Code/resources/app/out/vs/workbench/workbench.desktop.main.js:30:75430)
at vscode-file://vscode-app/c:/Users/myUsername/AppData/Local/Programs/Microsoft%20VS%20Code/resources/app/out/vs/workbench/workbench.desktop.main.js:30:75342
at new Promise ()
at Sv.queue (vscode-file://vscode-app/c:/Users/myUsername/AppData/Local/Programs/Microsoft%20VS%20Code/resources/app/out/vs/workbench/workbench.desktop.main.js:30:75284)
at uyt.writeConfiguration (vscode-file://vscode-app/c:/Users/myUsername/AppData/Local/Programs/Microsoft%20VS%20Code/resources/app/out/vs/workbench/workbench.desktop.main.js:3360:3743)
at Prn.Hb (vscode-file://vscode-app/c:/Users/myUsername/AppData/Local/Programs/Microsoft%20VS%20Code/resources/app/out/vs/workbench/workbench.desktop.main.js:3360:42740)
2025-07-14 19:04:27.204 [warning] [Window] Authentication provider codeium_auth was not declared in the Extension Manifest.
2025-07-14 19:04:27.593 [error] [Window] [Extension Host] ERROR: The system was unable to find the specified registry key or value.
...
2025-07-14 19:04:32.964 [error] [Window] [Extension Host] ERROR: The system was unable to find the specified registry key or value.

2025-07-14 19:04:38.772 [info] [Window] Extension host (LocalProcess pid: 20772) is unresponsive.
2025-07-14 19:04:39.998 [info] [Window] UNRESPONSIVE extension host: starting to profile NOW
2025-07-14 19:05:47.854 [error] [Window] Extension host (LocalProcess pid: 20772) terminated unexpectedly. The following extensions were running: vscode.github-authentication, vscode.git-base, christian-kohler.path-intellisense, ms-vscode.test-adapter-converter, vscode.github, hbenl.vscode-test-explorer, vscode.debug-auto-launch, vscode.merge-conflict, esbenp.prettier-vscode, ms-dotnettools.vscode-dotnet-runtime, ms-vscode-remote.remote-containers, ms-vscode-remote.remote-wsl, PKief.material-icon-theme, vscode.git, Codeium.codeium, dbaeumer.vscode-eslint, G-Fidalgo.cypress-runner, GitHub.copilot, GitHub.copilot-chat, ms-python.python, Postman.postman-for-vscode, littlefoxteam.vscode-python-test-adapter, vscode.configuration-editing, vscode.json-language-features, vscode.typescript-language-features, vscode.emmet, ms-python.vscode-pylance, vscode.extension-editing, vscode.markdown-language-features, vscode.markdown-math, vscode.npm, christian-kohler.npm-intellisense, VisualStudioExptTeam.intellicode-api-usage-examples, VisualStudioExptTeam.vscodeintellicode, Continue.continue

Here an restart of Extension Server was made

2025-07-14 19:08:12.689 [info] [Window] Started local extension host with pid 19828.
2025-07-14 19:08:14.066 [error] [Window] [Extension Host] (node:19828) [DEP0040] DeprecationWarning: The punycode module is deprecated. Please use a userland alternative instead.

Expected correct behaviour:

1. Git repository should be initialized
2. Git tree should be displayed.

Workaround:

• disable extension: Continue - open-source AI code assistant
• restart Extension host