"Failed to load settings" (STATUS_UNHANDLED_EXCEPTION 0xC0000144) whenever %LOCALAPPDATA%\Microsoft\Windows Terminal\Fragments exists, even empty #20893

Windows Terminal version

1.24.11911.0 and 1.25.2733.0 (packaged / MSIX)
(1.25 not re-tested with an A/B; the folder was recreated and the error returned while on 1.25.2733.0)

Windows build number

10.0.26100 (Windows 11 Enterprise)

Other Software

Visual Studio creates Fragments\VSDebugConsole\vsdebugconsole.json on its own.

Steps to reproduce

1. Close Windows Terminal.
2. Create the directory %LOCALAPPDATA%\Microsoft\Windows Terminal\Fragments\ (empty is enough).
3. Launch Windows Terminal.

Expected Behavior

Settings load normally. An empty Fragments directory (or one with a valid fragment) is ignored/merged.

Actual Behavior

Dialog "Failed to load settings ... Check for syntax errors, including trailing commas.", followed by the message
{Application Error} The exception %s (0x (= NTSTATUS 0xC0000144, STATUS_UNHANDLED_EXCEPTION, truncated at its own %s insert).
Terminal falls back to default settings and shows the dialog again on every settings save.
settings.json and the fragment JSON both parse as valid JSON.

Bisection (kill/relaunch between trials; healthy load = LocalState\state.json gets written):

• no Fragments dir -> OK
• empty Fragments dir -> FAILED
• Fragments\X dir, no json -> FAILED
• Fragments\X\t.json (minimal / with guid / schemes-only) -> FAILED
• dynamic profile generators on/off -> no effect (OK when no Fragments dir)

While broken, settings.json is regenerated with only the two static profiles (no PowerShell Core / Azure / VisualStudio generated profiles) and state.json is never written.

Workaround: rename/delete the Fragments directory.