MCP Stdio client fails to render multi-line stdout output from shell execution server

[pnfinn]

Which version of LM Studio?
Latest version of Bionic Version 1.1.1+5 (1.1.1+5)

Which operating system?
macOS Tahoe 26.6.2

What is the bug?
MCP Stdio stream fails to render multi-line tool output when using ⁠@mkusaka/mcp-shell-server⁠. The tool execution starts, but the final text payload (⁠stdout⁠) is never returned or rendered in the active chat thread.
(Note: The server has been verified independently via raw-pipe input and is fully healthy; it outputs clean, newline-delimited JSON-RPC, indicating a client-side parsing or stream-reading issue with multi-line string payloads).
To Reproduce
Steps to reproduce the behavior:

1. Configure Bionic to connect to ⁠@mkusaka/mcp-shell-server⁠ using npx
2. Trigger the ⁠shell_exec⁠ tool with a command that produces multi-line output (e.g., ⁠df -h⁠).
3. Observe that the tool execution starts, but the final text payload is never returned or rendered in the UI.