Describe the bug

The XDG_CONFIG_HOME environment variable no longer appears to be respected for determining the configuration directory. This is a regression from 0.0.421.

Note that COPILOT_HOME and --config-dir are not acceptable substitutes because they also redirect machine local state, including:

• The SQLite database
• Auto-update package cache under pkg/
• Temporary .lock files

These artifacts are unsuitable for cloud sync (OneDrive) or version control (Git).

By contrast, XDG_CONFIG_HOME would only redirect the user's configuration (config.json, skills, agents, etc.). The XDG spec deliberately separates configuration XDG_CONFIG_HOME from state XDG_STATE_HOME for exactly this reason.

Affected version

GitHub Copilot CLI 1.0.4

Steps to reproduce the behavior

1. Set XDG_CONFIG_HOME

# PowerShell (Windows) — set for current session
$env:XDG_CONFIG_HOME = "D:\my_copilot_config"

2. Create a minimal agent under the XDG config path

# PowerShell
New-Item -ItemType Directory -Force "$env:XDG_CONFIG_HOME\.copilot\agents"
@"
---
name: xdg-test
description: "Test agent to verify XDG_CONFIG_HOME support."
---
Reply with OK.
"@ | Set-Content "$env:XDG_CONFIG_HOME\.copilot\agents\xdg-test.agent.md"

3. Launch Copilot CLI and check /agents

/agent


 Custom Agents

 Select Agent:
 ❯ 1. Default (current)

 Manage Agents:
   1. Create new agent...
   2. Learn more about custom agents

 ↑↓ to navigate · Enter to select · Esc to cancel

Expected behavior

xdg-test appears in the list of available agents:

Custom Agents

 Select Agent:
 ❯ 1. Default (current)
   2. xdg-test · user

 Manage Agents:
   3. Create new agent...
   4. Learn more about custom agents

 ↑↓ to navigate · Enter to select · Esc to cancel

Additional context

No response