Extension installed via VSIX still causes error pop-ups when not found in the marketplace

[frankfetters]

Is there an existing issue for this?

• I have searched the existing issues

OS/Web Information

• Web Browser: Chrome
• Local OS: macOs
• Remote OS: Debian GNU/Linux 12 (bookworm)
• Remote Architecture: aarch64
• code-server --version: 4.108.2

Steps to Reproduce

1. Start up code-server v4.108.2
2. Build copilot-chat-0.36.2.vsix from vscode-copilot-chat open source repo
3. Install via VSIX
4. Hover over the built-in copilot logo in the bottom nav and click on "Sign in to use AI Features".
5. Follow the Continue with GitHub device sign-in flow.

Expected

Upon logging in, I'd expect to be able to interact with the copilot-chat plugin without any errors popping up.
I would not expect code-server to try to find the extension on the marketplace since I installed it via VSIX.

Actual

First I see a pop-up that says "An error occurred while setting up chat. Would you like to try again?
The extension 'GitHub.copilot-chat' cannot be installed because it was not found.".
I click cancel on that and see a pop-up that says "Chat setup failed. Would you like to try again?".
I click cancel on that and see that I am able to interact with the copilot-chat plugin without any issues.

I've tried disabling auto-update and that has no effect.

Alternative 1 - If I authenticate to GitHub first and then try to use the AI Features in the right side chat panel, I don't see the error pop-ups.
Alternative 2 - If I stand up a private marketplace (e.g. code-marketplace) and put my VSIX file there, I don't get an error pop-up since my private marketplace answers the post-authentication calls that code-server makes to the marketplace to pull metadata about the extension.

Logs

Here are the logs from when I install the extension via VSIX which succeeds:
026-02-03 21:25:14.869 [info] Downloaded extension to file:///home/coder/.local/share/code-server/CachedExtensionVSIXs/21e29f43-3ff1-4d75-85b5-b61e6bb65eb2
2026-02-03 21:25:15.208 [info] Downloaded extension to file:///home/coder/.local/share/code-server/CachedExtensionVSIXs/28147d14-c373-4c07-b81b-a152a88a9a29
2026-02-03 21:25:15.214 [info] Installing extension: github.copilot-chat {"installGivenVersion":true,"isApplicationScoped":false,"profileLocation":{"$mid":1,"fsPath":"/home/coder/.local/share/code-server/extensions/extensions.json","external":"file:///home/coder/.local/share/code-server/extensions/extensions.json","path":"/home/coder/.local/share/code-server/extensions/extensions.json","scheme":"file"},"productVersion":{"version":"1.108.2","date":"2026-01-26T20:52:05.876Z"}}
2026-02-03 21:25:15.508 [info] Extracted extension to file:///home/coder/.local/share/code-server/extensions/github.copilot-chat-0.36.2: github.copilot-chat
2026-02-03 21:25:15.512 [info] Renamed to /home/coder/.local/share/code-server/extensions/github.copilot-chat-0.36.2
2026-02-03 21:25:15.529 [info] Extension installed successfully: github.copilot-chat file:///home/coder/.local/share/code-server/extensions/extensions.json


Here is the error in the logs:
2026-02-03 15:28:21.267 [error] [Window] [chat setup] install: error undefined
2026-02-03 15:28:32.440 [error] [Window] [chat setup] install: error NotFound: The extension 'GitHub.copilot-chat' cannot be installed because it was not found.

Screenshot/Video

No response

Does this bug reproduce in native VS Code?

I did not test native VS Code

Does this bug reproduce in VS Code web?

I did not test VS Code web

Does this bug reproduce in GitHub Codespaces?

I did not test GitHub Codespaces

Are you accessing code-server over a secure context?

• I am using a secure context.

Notes

No response