Does this issue occur when all extensions are disabled?: Yes/No

• VS Code Version: 1.99.0
• OS Version: Darwin arm64 24.3.0

Steps to Reproduce:

1. checkout a new branch from main branch, naming conflict1, make a change including deleting two files, commit the change with a random message, keep it for further merging.
2. checkout another new branch from main branch, naming conflict2, make a change including add a line of code for one file of above two, and then execute git merge conflict1 command, results displayed as below:

the problem is that, in the Merge Change ResourceGroup of scm view, a ResourceState of a file is DELETE_BY_THEM status but Letter shows D rather than ! which makes me considering that there is no conflict information from scm view, however current merging has a conflict and need to resolve.

of course if I get the correct status information from Terminal panel or from the text of the letter when hover.

tip: I consider it's a feedback rather than bug report