diff --git a/src/common/telemetry/constants.ts b/src/common/telemetry/constants.ts
index 4cd75372..91de136a 100644
--- a/src/common/telemetry/constants.ts
+++ b/src/common/telemetry/constants.ts
@@ -50,6 +50,30 @@ export enum EventNames {
      */
     ENVIRONMENT_DISCOVERY = 'ENVIRONMENT_DISCOVERY',
     MANAGER_READY_TIMEOUT = 'MANAGER_READY.TIMEOUT',
+    /**
+     * Telemetry event for individual manager registration failure.
+     * Fires once per manager that fails during registration (inside safeRegister).
+     * Properties:
+     * - managerName: string (e.g. 'system', 'conda', 'pyenv', 'pipenv', 'poetry', 'shellStartupVars')
+     * - errorType: string (classified error category from classifyError)
+     */
+    MANAGER_REGISTRATION_FAILED = 'MANAGER_REGISTRATION.FAILED',
+    /**
+     * Telemetry event fired when the setup block appears to be hung.
+     * A watchdog timer fires after a deadline; if the setup completes normally,
+     * the timer is cancelled and this event never fires.
+     * Properties:
+     * - failureStage: string (which phase was in progress when the watchdog fired)
+     */
+    SETUP_HANG_DETECTED = 'SETUP.HANG_DETECTED',
+    /**
+     * Telemetry event for when a manager skips registration because its tool was not found.
+     * This is an expected outcome (not an error) and is distinct from MANAGER_REGISTRATION_FAILED.
+     * Properties:
+     * - managerName: string (e.g. 'conda', 'pyenv', 'pipenv', 'poetry')
+     * - reason: string ('tool_not_found')
+     */
+    MANAGER_REGISTRATION_SKIPPED = 'MANAGER_REGISTRATION.SKIPPED',
 }
 
 // Map all events to their properties
@@ -62,10 +86,17 @@ export interface IEventNamePropertyMapping {
     [EventNames.EXTENSION_ACTIVATION_DURATION]: never | undefined;
     /* __GDPR__
        "extension.manager_registration_duration": {
-           "duration" : { "classification": "SystemMetaData", "purpose": "FeatureInsight", "owner": "eleanorjboyd" }
+           "duration" : { "classification": "SystemMetaData", "purpose": "FeatureInsight", "owner": "eleanorjboyd" },
+           "result" : { "classification": "SystemMetaData", "purpose": "FeatureInsight", "owner": "StellaHuang95" },
+           "failureStage" : { "classification": "SystemMetaData", "purpose": "FeatureInsight", "owner": "StellaHuang95" },
+           "errorType" : { "classification": "SystemMetaData", "purpose": "FeatureInsight", "owner": "StellaHuang95" }
        }
     */
-    [EventNames.EXTENSION_MANAGER_REGISTRATION_DURATION]: never | undefined;
+    [EventNames.EXTENSION_MANAGER_REGISTRATION_DURATION]: {
+        result: 'success' | 'error';
+        failureStage?: string;
+        errorType?: string;
+    };
 
     /* __GDPR__
         "environment_manager.registered": {
@@ -239,4 +270,36 @@ export interface IEventNamePropertyMapping {
         managerId: string;
         managerKind: 'environment' | 'package';
     };
+
+    /* __GDPR__
+        "manager_registration.failed": {
+            "managerName": { "classification": "SystemMetaData", "purpose": "FeatureInsight", "owner": "StellaHuang95" },
+            "errorType": { "classification": "SystemMetaData", "purpose": "FeatureInsight", "owner": "StellaHuang95" }
+        }
+    */
+    [EventNames.MANAGER_REGISTRATION_FAILED]: {
+        managerName: string;
+        errorType: string;
+    };
+
+    /* __GDPR__
+        "setup.hang_detected": {
+            "failureStage": { "classification": "SystemMetaData", "purpose": "FeatureInsight", "owner": "StellaHuang95" },
+            "<duration>": { "classification": "SystemMetaData", "purpose": "FeatureInsight", "isMeasurement": true, "owner": "StellaHuang95" }
+        }
+    */
+    [EventNames.SETUP_HANG_DETECTED]: {
+        failureStage: string;
+    };
+
+    /* __GDPR__
+        "manager_registration.skipped": {
+            "managerName": { "classification": "SystemMetaData", "purpose": "FeatureInsight", "owner": "StellaHuang95" },
+            "reason": { "classification": "SystemMetaData", "purpose": "FeatureInsight", "owner": "StellaHuang95" }
+        }
+    */
+    [EventNames.MANAGER_REGISTRATION_SKIPPED]: {
+        managerName: string;
+        reason: 'tool_not_found';
+    };
 }
diff --git a/src/common/utils/asyncUtils.ts b/src/common/utils/asyncUtils.ts
index b0de59e4..06380b29 100644
--- a/src/common/utils/asyncUtils.ts
+++ b/src/common/utils/asyncUtils.ts
@@ -1,4 +1,7 @@
 import { traceError } from '../logging';
+import { EventNames } from '../telemetry/constants';
+import { classifyError } from '../telemetry/errorClassifier';
+import { sendTelemetryEvent } from '../telemetry/sender';
 
 export async function timeout(milliseconds: number): Promise<void> {
     return new Promise<void>((resolve) => setTimeout(resolve, milliseconds));
@@ -13,5 +16,9 @@ export async function safeRegister(name: string, task: Promise<void>): Promise<v
         await task;
     } catch (error) {
         traceError(`Failed to register ${name} features:`, error);
+        sendTelemetryEvent(EventNames.MANAGER_REGISTRATION_FAILED, undefined, {
+            managerName: name,
+            errorType: classifyError(error),
+        });
     }
 }
diff --git a/src/extension.ts b/src/extension.ts
index e3c21245..a35c0fab 100644
--- a/src/extension.ts
+++ b/src/extension.ts
@@ -17,6 +17,7 @@ import { clearPersistentState, setPersistentState } from './common/persistentSta
 import { newProjectSelection } from './common/pickers/managers';
 import { StopWatch } from './common/stopWatch';
 import { EventNames } from './common/telemetry/constants';
+import { classifyError } from './common/telemetry/errorClassifier';
 import {
     logDiscoverySummary,
     sendEnvironmentToolUsageTelemetry,
@@ -522,6 +523,26 @@ export async function activate(context: ExtensionContext): Promise<PythonEnviron
      * Below are all the contributed features using the APIs.
      */
     setImmediate(async () => {
+        let failureStage = 'nativeFinder';
+        // Watchdog: fires if setup hasn't completed within 120s, indicating a likely hang
+        const SETUP_HANG_TIMEOUT_MS = 120_000;
+        let hangWatchdogActive = true;
+        const clearHangWatchdog = () => {
+            if (!hangWatchdogActive) {
+                return;
+            }
+            hangWatchdogActive = false;
+            clearTimeout(hangWatchdog);
+        };
+        const hangWatchdog = setTimeout(() => {
+            if (!hangWatchdogActive) {
+                return;
+            }
+            hangWatchdogActive = false;
+            traceError(`Setup appears hung during stage: ${failureStage}`);
+            sendTelemetryEvent(EventNames.SETUP_HANG_DETECTED, start.elapsedTime, { failureStage });
+        }, SETUP_HANG_TIMEOUT_MS);
+        context.subscriptions.push({ dispose: clearHangWatchdog });
         try {
             // This is the finder that is used by all the built in environment managers
             const nativeFinder: NativePythonFinder = await createNativePythonFinder(outputChannel, api, context);
@@ -529,6 +550,7 @@ export async function activate(context: ExtensionContext): Promise<PythonEnviron
             const sysMgr = new SysPythonManager(nativeFinder, api, outputChannel);
             sysPythonManager.resolve(sysMgr);
             // Each manager registers independently — one failure must not block the others.
+            failureStage = 'managerRegistration';
             await Promise.all([
                 safeRegister(
                     'system',
@@ -547,17 +569,23 @@ export async function activate(context: ExtensionContext): Promise<PythonEnviron
                 safeRegister('shellStartupVars', shellStartupVarsMgr.initialize()),
             ]);
 
+            failureStage = 'envSelection';
             await applyInitialEnvironmentSelection(envManagers, projectManager, nativeFinder, api);
 
             // Register manager-agnostic terminal watcher for package-modifying commands
+            failureStage = 'terminalWatcher';
             registerTerminalPackageWatcher(api, terminalActivation, outputChannel, context.subscriptions);
 
             // Register listener for interpreter settings changes for interpreter re-selection
+            failureStage = 'settingsListener';
             context.subscriptions.push(
                 registerInterpreterSettingsChangeListener(envManagers, projectManager, nativeFinder, api),
             );
 
-            sendTelemetryEvent(EventNames.EXTENSION_MANAGER_REGISTRATION_DURATION, start.elapsedTime);
+            sendTelemetryEvent(EventNames.EXTENSION_MANAGER_REGISTRATION_DURATION, start.elapsedTime, {
+                result: 'success',
+            });
+            clearHangWatchdog();
             try {
                 await terminalManager.initialize(api);
                 sendManagerSelectionTelemetry(projectManager);
@@ -570,11 +598,16 @@ export async function activate(context: ExtensionContext): Promise<PythonEnviron
                 traceError('Post-initialization tasks failed:', postInitError);
             }
         } catch (error) {
+            clearHangWatchdog();
             traceError('Failed to initialize environment managers:', error);
             sendTelemetryEvent(
                 EventNames.EXTENSION_MANAGER_REGISTRATION_DURATION,
                 start.elapsedTime,
-                undefined,
+                {
+                    result: 'error',
+                    failureStage,
+                    errorType: classifyError(error),
+                },
                 error instanceof Error ? error : undefined,
             );
             // Show a user-friendly error message
diff --git a/src/managers/conda/main.ts b/src/managers/conda/main.ts
index 70456efd..a92da66e 100644
--- a/src/managers/conda/main.ts
+++ b/src/managers/conda/main.ts
@@ -1,6 +1,8 @@
 import { Disposable, LogOutputChannel } from 'vscode';
 import { PythonEnvironmentApi } from '../../api';
 import { traceInfo } from '../../common/logging';
+import { EventNames } from '../../common/telemetry/constants';
+import { sendTelemetryEvent } from '../../common/telemetry/sender';
 import { getPythonApi } from '../../features/pythonApi';
 import { PythonProjectManager } from '../../internal.api';
 import { NativePythonFinder } from '../common/nativePythonFinder';
@@ -18,9 +20,22 @@ export async function registerCondaFeatures(
 ): Promise<void> {
     const api: PythonEnvironmentApi = await getPythonApi();
 
+    let condaPath: string | undefined;
     try {
         // get Conda will return only ONE conda manager, that correlates to a single conda install
-        const condaPath: string = await getConda(nativeFinder);
+        condaPath = await getConda(nativeFinder);
+    } catch (ex) {
+        traceInfo('Conda not found, turning off conda features.', ex);
+        sendTelemetryEvent(EventNames.MANAGER_REGISTRATION_SKIPPED, undefined, {
+            managerName: 'conda',
+            reason: 'tool_not_found',
+        });
+        await notifyMissingManagerIfDefault('ms-python.python:conda', projectManager, api);
+        return;
+    }
+
+    // Conda was found — errors below are real registration failures (let safeRegister handle telemetry)
+    try {
         const sourcingStatus: CondaSourcingStatus = await constructCondaSourcingStatus(condaPath);
         traceInfo(sourcingStatus.toString());
 
@@ -36,7 +51,7 @@ export async function registerCondaFeatures(
             api.registerPackageManager(packageManager),
         );
     } catch (ex) {
-        traceInfo('Conda not found, turning off conda features.', ex);
         await notifyMissingManagerIfDefault('ms-python.python:conda', projectManager, api);
+        throw ex;
     }
 }
diff --git a/src/managers/pipenv/main.ts b/src/managers/pipenv/main.ts
index d87d0d9b..75f567a1 100644
--- a/src/managers/pipenv/main.ts
+++ b/src/managers/pipenv/main.ts
@@ -1,6 +1,9 @@
 import { Disposable } from 'vscode';
 import { PythonEnvironmentApi } from '../../api';
 import { traceInfo } from '../../common/logging';
+import { EventNames } from '../../common/telemetry/constants';
+import { classifyError } from '../../common/telemetry/errorClassifier';
+import { sendTelemetryEvent } from '../../common/telemetry/sender';
 import { getPythonApi } from '../../features/pythonApi';
 import { PythonProjectManager } from '../../internal.api';
 import { NativePythonFinder } from '../common/nativePythonFinder';
@@ -35,6 +38,10 @@ export async function registerPipenvFeatures(
             traceInfo(
                 'Pipenv not found, turning off pipenv features. If you have pipenv installed in a non-standard location, set the "python.pipenvPath" setting.',
             );
+            sendTelemetryEvent(EventNames.MANAGER_REGISTRATION_SKIPPED, undefined, {
+                managerName: 'pipenv',
+                reason: 'tool_not_found',
+            });
             await notifyMissingManagerIfDefault('ms-python.python:pipenv', projectManager, api);
         }
     } catch (ex) {
@@ -42,6 +49,10 @@ export async function registerPipenvFeatures(
             'Pipenv not found, turning off pipenv features. If you have pipenv installed in a non-standard location, set the "python.pipenvPath" setting.',
             ex,
         );
+        sendTelemetryEvent(EventNames.MANAGER_REGISTRATION_FAILED, undefined, {
+            managerName: 'pipenv',
+            errorType: classifyError(ex),
+        });
         await notifyMissingManagerIfDefault('ms-python.python:pipenv', projectManager, api);
     }
 }
diff --git a/src/managers/poetry/main.ts b/src/managers/poetry/main.ts
index 5f74fb46..bd28f5ec 100644
--- a/src/managers/poetry/main.ts
+++ b/src/managers/poetry/main.ts
@@ -1,6 +1,9 @@
 import { Disposable, LogOutputChannel } from 'vscode';
 import { PythonEnvironmentApi } from '../../api';
 import { traceInfo } from '../../common/logging';
+import { EventNames } from '../../common/telemetry/constants';
+import { classifyError } from '../../common/telemetry/errorClassifier';
+import { sendTelemetryEvent } from '../../common/telemetry/sender';
 import { getPythonApi } from '../../features/pythonApi';
 import { PythonProjectManager } from '../../internal.api';
 import { NativePythonFinder } from '../common/nativePythonFinder';
@@ -36,10 +39,18 @@ export async function registerPoetryFeatures(
             );
         } else {
             traceInfo('Poetry not found, turning off poetry features.');
+            sendTelemetryEvent(EventNames.MANAGER_REGISTRATION_SKIPPED, undefined, {
+                managerName: 'poetry',
+                reason: 'tool_not_found',
+            });
             await notifyMissingManagerIfDefault('ms-python.python:poetry', projectManager, api);
         }
     } catch (ex) {
         traceInfo('Poetry not found, turning off poetry features.', ex);
+        sendTelemetryEvent(EventNames.MANAGER_REGISTRATION_FAILED, undefined, {
+            managerName: 'poetry',
+            errorType: classifyError(ex),
+        });
         await notifyMissingManagerIfDefault('ms-python.python:poetry', projectManager, api);
     }
 }
diff --git a/src/managers/pyenv/main.ts b/src/managers/pyenv/main.ts
index 2ca6a96a..853c44d7 100644
--- a/src/managers/pyenv/main.ts
+++ b/src/managers/pyenv/main.ts
@@ -1,6 +1,9 @@
 import { Disposable } from 'vscode';
 import { PythonEnvironmentApi } from '../../api';
 import { traceInfo } from '../../common/logging';
+import { EventNames } from '../../common/telemetry/constants';
+import { classifyError } from '../../common/telemetry/errorClassifier';
+import { sendTelemetryEvent } from '../../common/telemetry/sender';
 import { getPythonApi } from '../../features/pythonApi';
 import { PythonProjectManager } from '../../internal.api';
 import { NativePythonFinder } from '../common/nativePythonFinder';
@@ -23,10 +26,18 @@ export async function registerPyenvFeatures(
             disposables.push(mgr, api.registerEnvironmentManager(mgr));
         } else {
             traceInfo('Pyenv not found, turning off pyenv features.');
+            sendTelemetryEvent(EventNames.MANAGER_REGISTRATION_SKIPPED, undefined, {
+                managerName: 'pyenv',
+                reason: 'tool_not_found',
+            });
             await notifyMissingManagerIfDefault('ms-python.python:pyenv', projectManager, api);
         }
     } catch (ex) {
         traceInfo('Pyenv not found, turning off pyenv features.', ex);
+        sendTelemetryEvent(EventNames.MANAGER_REGISTRATION_FAILED, undefined, {
+            managerName: 'pyenv',
+            errorType: classifyError(ex),
+        });
         await notifyMissingManagerIfDefault('ms-python.python:pyenv', projectManager, api);
     }
 }