feat: Improve terminal output processing clarity and settings UI

- Add detailed comments to `processCarriageReturns` explaining line feed handling.
- Relocate `terminalCompressProgressBar` setting below `terminalOutputLineLimit` for better context in UI.

Author: Yikai-Liao

src/integrations/misc/extract-text.ts

@@ -274,7 +274,11 @@ export function processCarriageReturns(input: string): string {
 			output += curLine
 		}
 
-		// Add line feed (\n) if not at end of text
+		// 'curLine' now holds the processed content of the line *without* its original terminating line feed (\n) character.
+		// 'lineEnd' points to the position of that line feed (\n) in the original input, or to the end of the input string if no line feed (\n) was found.
+		// This check explicitly adds the line feed (\n) character back *only if* one was originally present at this position (lineEnd < len).
+		// This ensures we preserve the original structure, correctly handling inputs both with and without a final line feed (\n),
+		// rather than incorrectly injecting a line feed (\n) if the original input didn't end with one.
 		if (lineEnd < len) output += "\n"
 
 		// Move to next line

webview-ui/src/components/settings/TerminalSettings.tsx

@@ -77,6 +77,18 @@ export const TerminalSettings = ({
 					</div>
 				</div>
 
+				<div>
+					<VSCodeCheckbox
+						checked={terminalCompressProgressBar ?? true}
+						onChange={(e: any) => setCachedStateField("terminalCompressProgressBar", e.target.checked)}
+						data-testid="terminal-compress-progress-bar-checkbox">
+						<span className="font-medium">{t("settings:terminal.compressProgressBar.label")}</span>
+					</VSCodeCheckbox>
+					<div className="text-vscode-descriptionForeground text-sm mt-1">
+						{t("settings:terminal.compressProgressBar.description")}
+					</div>
+				</div>
+
 				<div>
 					<label className="block font-medium mb-1">
 						{t("settings:terminal.shellIntegrationTimeout.label")}
@@ -179,18 +191,6 @@ export const TerminalSettings = ({
 						{t("settings:terminal.zdotdir.description")}
 					</div>
 				</div>
-
-				<div>
-					<VSCodeCheckbox
-						checked={terminalCompressProgressBar ?? true}
-						onChange={(e: any) => setCachedStateField("terminalCompressProgressBar", e.target.checked)}
-						data-testid="terminal-compress-progress-bar-checkbox">
-						<span className="font-medium">{t("settings:terminal.compressProgressBar.label")}</span>
-					</VSCodeCheckbox>
-					<div className="text-vscode-descriptionForeground text-sm mt-1">
-						{t("settings:terminal.compressProgressBar.description")}
-					</div>
-				</div>
 			</Section>
 		</div>
 	)