Does this issue occur when all extensions are disabled?: Yes

• VS Code Version: 1.97.0-insider (commit: ce50bd4)
• OS Version: Windows 11 24H2 x64 (version: 10.0.26100.2605)

Steps to Reproduce:

1. Download insiders version of vscode_cli_win32_x64_cli.zip from official website, extract code-insider.exe to work directory (e.g. D:\vsc\);
2. under work dir, make sub dirs: server-data, server-extensions, cli-data;
3. open Windows Terminal with PowerShell at work dir, set environment variable: $env:VSCODE_CLI_DATA_DIR='D:\vsc\cli-data;
4. install service: .\code-insiders.exe tunnel --server-data-dir D:\vsc\server-data --extensions-dir D:\vsc\server-extensions --cli-data-dir D:\vsc\cli-data service install --name test-srv;
5. service test-srv started successfully, but it didn't use --server-data-dir and --extensions-dir as target path; Instead, code-insiders.exe will create data and extensions dir under $env:USERPROFILE using default behavior.

The two(three) args works as expected when creating tunnel:
.\code-insiders.exe tunnel --server-data-dir D:\vsc\server-data --extensions-dir D:\vsc\server-extensions --cli-data-dir D:\vsc\cli-data --name test-tunnel.