diff --git a/MacOS/Components/Diagnostics/simple_report.sh b/MacOS/Components/Diagnostics/simple_report.sh
index cf136f73..861eb7a3 100755
--- a/MacOS/Components/Diagnostics/simple_report.sh
+++ b/MacOS/Components/Diagnostics/simple_report.sh
@@ -139,19 +139,22 @@ run_first_year_test() {
     
     # Test 5: VS Code Extensions
     echo "Testing VS Code Extensions..."
-    if code --list-extensions 2>/dev/null | grep -q "ms-python.python"; then
-        echo "PASS: Python extension installed"
-        if code --list-extensions 2>/dev/null | grep -q "ms-toolsai.jupyter"; then
-            echo "PASS: Jupyter extension installed"  
+    if [ "$vscode_failed" = false ]; then
+        if code --list-extensions 2>/dev/null | grep -q "ms-python.python"; then
+            echo "PASS: Python extension installed"
+            if code --list-extensions 2>/dev/null | grep -q "ms-toolsai.jupyter"; then
+                echo "PASS: Jupyter extension installed"  
+            else
+                echo "FAIL: Jupyter extension missing"
+                extensions_failed=true
+            fi
         else
-            echo "FAIL: Jupyter extension missing"
+            echo "FAIL: Python extension missing"
             extensions_failed=true
         fi
     else
-        echo "FAIL: Python extension missing"
-        extensions_failed=true
+        echo "SKIP: VS Code not available for extension testing"
     fi
-    
     echo ""
     
     # Test 6: Conda Base Environment Activation
@@ -726,4 +729,4 @@ main() {
 # Also run if executed via bash -c (when BASH_SOURCE[0] is bash)
 if [[ "${BASH_SOURCE[0]}" == "${0}" ]] || [[ "${BASH_SOURCE[0]}" == "bash" ]] || [[ -z "${BASH_SOURCE[0]}" ]]; then
     main
-fi
\ No newline at end of file
+fi
diff --git a/Windows/Components/Diagnostics/generate_report.ps1 b/Windows/Components/Diagnostics/generate_report.ps1
index 6bb56dcf..d84825e0 100644
--- a/Windows/Components/Diagnostics/generate_report.ps1
+++ b/Windows/Components/Diagnostics/generate_report.ps1
@@ -178,6 +178,7 @@ function Test-FirstYearSetup {
     Write-Output ""
     
     $failCount = 0
+    $vsCodeWorks = false
     
     # Test 1: Miniforge Installation
     Write-Output "Testing Miniforge Installation..."
@@ -251,6 +252,7 @@ function Test-FirstYearSetup {
         $codeTest = & $SystemInfo.VSCodePath --version 2>$null
         if ($LASTEXITCODE -eq 0) {
             Write-Output "PASS: VS Code $($codeTest | Select-Object -First 1)"
+            $vsCodeWorks = true
         } else {
             Write-Output "FAIL: VS Code not available"
             $failCount++
@@ -263,7 +265,7 @@ function Test-FirstYearSetup {
     
     # Test 5: VS Code Extensions
     Write-Output "Testing VS Code Extensions..."
-    if ($SystemInfo.VSCodePath) {
+    if ($SystemInfo.VSCodePath -and $vsCodeWorks) {
         $pythonExtension = & $SystemInfo.VSCodePath --list-extensions 2>$null | Where-Object { $_ -eq "ms-python.python" }
         if ($pythonExtension) {
             Write-Output "PASS: Python extension installed"
@@ -279,8 +281,7 @@ function Test-FirstYearSetup {
             $failCount++
         }
     } else {
-        Write-Output "FAIL: VS Code not available for extension testing"
-        $failCount++
+        Write-Output "SKIP: VS Code not available for extension testing"
     }
     Write-Output ""