fix: Extension frozen on debug mode

packages/kilo-vscode/src/services/cli-backend/sdk-sse-adapter.ts

@@ -173,16 +173,13 @@ export class SdkSSEAdapter {
 
           this.resetHeartbeat(attempt)
 
-          // The SDK yields GlobalEvent = { directory, payload: Event | SyncEvent* }.
-          // We only forward the non-sync Event union; sync replay events are handled elsewhere.
+          // The SDK yields GlobalEvent = { directory, payload: Event }.
           const globalEvent = event as GlobalEvent
-          const payload = globalEvent.payload
-          const type = (payload as { type: string }).type
+          const type = (globalEvent.payload as { type: string }).type
           if (type !== "server.heartbeat") {
             console.log("[Kilo New] SSE: 📨 Event:", type)
           }
-          if (type === "sync") continue
-          this.notifyEvent(payload as Event)
+          this.notifyEvent(globalEvent.payload as Event)
         }
 
         console.log("[Kilo New] SSE: 📭 Stream ended normally")

packages/kilo-vscode/src/services/cli-backend/server-manager.ts

@@ -67,7 +67,12 @@ export class ServerManager {
     return new Promise((resolve, reject) => {
       console.log("[Kilo New] ServerManager: 🎬 Spawning CLI process:", cliPath, ["serve", "--port", "0"])
       const claudeCompat = vscode.workspace.getConfiguration("kilo-code.new").get<boolean>("claudeCodeCompat", false)
+      // kilocode_change - pin cwd to a workspace folder (or $HOME) so the CLI doesn't inherit
+      // the extension host's cwd, which is "/" under F5 debug and stalls cwd-dependent init.
+      const spawnCwd =
+        vscode.workspace.workspaceFolders?.[0]?.uri.fsPath ?? process.env.HOME ?? require("os").homedir()
       const serverProcess = spawn(cliPath, ["serve", "--port", "0"], {
+        cwd: spawnCwd, // kilocode_change
         env: {
           ...process.env,
           KILO_SERVER_PASSWORD: password,