DCR not detected for MCP server despite valid /.well-known metadata

[Nitin2108]

When adding the Production MCP server (https://cloudimanage.com/mcp/work) as a declarative agent using the M365 Agents Toolkit, VS Code does not detect that the server supports Dynamic Client Registration (DCR). Instead of auto-registering a client, it falls back to prompting for a static client configuration with an HTTP redirect URL.

The OAuth Authorization Server metadata is publicly accessible and correctly advertises DCR support:
https://cloudimanage.com/.well-known/oauth-authorization-server

The same flow works correctly against our DEV environment (https://work-mcp-ue2-dev.imanage.work/mcp/work), where DCR is auto-detected and client registration completes without manual input.

Expected behavior:
VS Code should fetch the /.well-known/oauth-authorization-server metadata, detect the DCR endpoint, and automatically register itself as a client — consistent with the behavior observed on the DEV environment.

Actual behavior:
VS Code skips DCR detection on the Production URL and presents a static client registration form requiring an HTTP redirect URL.

Environment:
OS | macOS Tahoe 26.5.1
VS Code Version | 1.124.0
Extension | M365 Agents Toolkit
Production MCP URL | https://cloudimanage.com/mcp/work
DEV MCP URL | https://work-mcp-ue2-dev.imanage.work/mcp/work

[m365-agent-toolkit-assistant]

👋 Hi @Nitin2108,

Thank you for reporting this issue! We want to let you know that:

⏱️ Our team will personally review your issue
🎯 You can expect a response within 2 business days

✨ This is an AI-generated initial response
🤖 AI-Generated Preliminary Analysis:

Classification: Bug — the docs say DynamicClientRegistration is a supported MCP auth type, but Toolkit is not consistently detecting DCR for one environment while the same flow works for another.

• Learn docs for MCP agent connectors list DynamicClientRegistration as a supported authentication type.
• Your prod and dev URLs behave differently under the same Toolkit flow, which is consistent with an environment-specific detection defect or unsupported metadata-parsing edge case in Toolkit.
• I didn’t find a separate matching issue in the searched repo beyond this report.
• The current stable changelog (packages/vscode-extension/CHANGELOG.md) shows no explicit DCR/MCP detection fix.

Upgrade check

• No verified fix found in the stable changelog; latest documented stable there is 5.10.1.

What to do now:

1. If you’re not already on the latest Toolkit build available in VS Code, update and retest.
2. As a workaround, use the static OAuth config path with redirect URL https://teams.microsoft.com/api/platform/v1.0/oAuthRedirect.
3. Attach the exact /.well-known/oauth-authorization-server payload from prod vs dev and Toolkit output logs to help isolate the parsing difference.

Useful links:

• No similar issues found in the searched repos.
• https://learn.microsoft.com/microsoftteams/platform/m365-apps/agent-connectors#configure-authentication
• https://learn.microsoft.com/microsoftteams/platform/m365-apps/agent-connectors

If you want, I can help draft the minimal log/details request for maintainers.

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Note: This is an automated first response generated by AI. A human team member will review your issue and provide a more detailed response soon. We appreciate your patience!

[Alive-Fish]

Hi @Nitin2108,

Thanks for the report. This isn't an issue with the Agents Toolkit.

DCR detection, the OAuth client registration, and the dialog in your screenshot are all handled by VS Code core's built-in MCP OAuth client. The Toolkit only writes the server into .vscode/mcp.json — VS Code does the rest (starting the server, fetching /.well-known metadata, deciding on DCR, and showing the auth UI).

Since PROD and DEV behave differently under the same flow, this is most likely either a difference in what the two servers return (/.well-known/oauth-authorization-server metadata or the 401 WWW-Authenticate header) or a parsing edge case in VS Code's MCP client — neither specific to the Toolkit.

I'd recommend filing this in the VS Code repo so the team that owns the MCP OAuth client can investigate:

👉 https://github.com/microsoft/vscode/issues

[Alive-Fish]

By the way, after #15592 has been finished, ATK will provide a dynamic tool discovery for the MCP server in DA. That doesn't depend on the capability of VS Code.