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Assisted Permissions mode in Enterprise Managed environments not working alongside disableBypassPermissionsMode #341390

Description

@rwoll

Given the following Enterprise Policy:

{
  "permissions": {
    "disableBypassPermissionsMode": "disable",
    "deny": [
      "Shell(rm -rf *)",
      "Read(~/.ssh/**)"
    ]
  }
}

ls isn't even making it to the LLM-as-a-Judge so its triggering an Ask dialog even when the user is in Assisted Permissions.

This looks to be a bug in the SDK/Runtime.

Actual

Neither deny matches ls
→ server deny rules activate implicit default-ask
→ managedApprovalRequired=true
→ skip the judge and ask the human 

Expected

Effective permission decision Manual Assisted
Deny Block Block; do not invoke judge
Allow Permit Permit; do not invoke judge
Explicit ask Ask user Judge first; ask user unless judge approves
Implicit default-ask Ask user Judge first; ask user unless judge approves
Existing permissions
  deny  -> block
  allow -> permit
  ask   -> Assisted judge
             approve           -> permit
             no / error / timeout -> ask user

Activity

  1. added
    bugIssue identified by VS Code Team member as probable bug
    on Oct 13, 2026
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