Forced mouse selection in terminal cleared after mouse movement under 1003 (all events) and 1006 (SGR) combination

Does this issue occur when all extensions are disabled?: I don't know how to run it with --disable-extensions when I'm simply opening Visual Studio Code - Insiders.app. But this is a fresh download and I have not installed any custom extensions.

• VS Code Version:

Version: 1.83.0-insider (Universal)
Commit: 4268e464763087044d0c1b5bdd37ebbe683cadfa
Date: 2023-09-29T20:44:15.716Z (1 day ago)
Electron: 25.8.4
ElectronBuildId: 24154031
Chromium: 114.0.5735.289
Node.js: 18.15.0
V8: 11.4.183.29-electron.0
OS: Darwin x64 21.6.0

• OS Version: macos 12.6.3

Steps to Reproduce:

1. Turn on the Mac Option Click Forces Selection option in settings.
2. Open integrated terminal, type printf '\e[?1003h' to allow terminal to intercept all events. 2.1 Move mouse around, observe that mouse events are being printed. 2.2 Option-click to make a selection, observe that a selection can be made. 2.3 Move mouse around, observe that the selection is still there. Video recording: https://github.com/microsoft/vscode/assets/10082143/f3145519-6b70-4ccf-a681-e615e823703a
3. In the same terminal, type printf '\e[?1006h' to use SGR format. 3.1 Move mouse around, observe that mouse events are being printed in a different format 3.2 Option-click to make a selection, observe that a selection can be made. But it disappears as soon as the mouse moves. Note that it might not be obvious from the screen recording, but as long as I make the selection carefully and don't move the mouse afterwards, the selection will not be cleared. 3.3 This makes the selection almost unusable, hence the bug report. It is not realistic to expect the user to not make any mouse movement after the selection. Video recording: https://github.com/microsoft/vscode/assets/10082143/97e0da02-2486-4878-80ee-1510b40432f4

Impact:

• I suspect this causes the issue downstream in the textual project - https://github.com/Textualize/textual/discussions/2190. If we look at the user report carefully, we can see that the issue is very similar to what I described above.

Disclaimer:

• I'm still new to this stuff, so my understanding and diagnosis above might not be fully accurate.