diff --git a/.vscode/settings.json b/.vscode/settings.json
index 70599b8520..5f1e58f516 100644
--- a/.vscode/settings.json
+++ b/.vscode/settings.json
@@ -3,4 +3,20 @@
     "files.eol": "\n",
     "files.trimTrailingWhitespace": true,
     "files.insertFinalNewline": true,
+
+    "python.defaultInterpreterPath": "./.venv/bin/python",
+    "python.terminal.activateEnvironment": true,
+    "python.analysis.autoImportCompletions": true,
+    "python.analysis.autoSearchPaths": true,
+    "python.analysis.extraPaths": [
+        "./.venv/lib/python3.12/site-packages"
+    ],
+    "python.analysis.packageIndexDepths": [
+        {
+            "name": "openhands",
+            "depth": 10,
+            "includeAllSymbols": true
+        }
+    ],
+    "python.analysis.stubPath": "./.venv/lib/python3.12/site-packages",
 }
diff --git a/openhands/app_server/config.py b/openhands/app_server/config.py
index d5dd726081..2dd50d7fa7 100644
--- a/openhands/app_server/config.py
+++ b/openhands/app_server/config.py
@@ -104,7 +104,7 @@ class AppServerConfig(OpenHandsModel):
     )
 
     # Services
-    lifespan: AppLifespanService = Field(default_factory=_get_default_lifespan)
+    lifespan: AppLifespanService | None = Field(default_factory=_get_default_lifespan)
 
 
 def config_from_env() -> AppServerConfig:
@@ -291,7 +291,7 @@ def get_db_session(
     return get_global_config().db_session.context(state, request)
 
 
-def get_app_lifespan_service() -> AppLifespanService:
+def get_app_lifespan_service() -> AppLifespanService | None:
     config = get_global_config()
     return config.lifespan
 
diff --git a/pyproject.toml b/pyproject.toml
index 0f73bb0e7b..b5f6a40230 100644
--- a/pyproject.toml
+++ b/pyproject.toml
@@ -115,7 +115,6 @@ pybase62 = "^1.0.0"
 # V1 dependencies
 openhands-agent-server = { git = "https://github.com/All-Hands-AI/agent-sdk.git", subdirectory = "openhands-agent-server", rev = "8d8134ca5a87cc3e90e3ff968327a7f4c961e22e" }
 openhands-sdk = { git = "https://github.com/All-Hands-AI/agent-sdk.git", subdirectory = "openhands-sdk", rev = "8d8134ca5a87cc3e90e3ff968327a7f4c961e22e" }
-# This refuses to install
 openhands-tools = { git = "https://github.com/All-Hands-AI/agent-sdk.git", subdirectory = "openhands-tools", rev = "8d8134ca5a87cc3e90e3ff968327a7f4c961e22e" }
 python-jose = { version = ">=3.3", extras = [ "cryptography" ] }
 sqlalchemy = { extras = [ "asyncio" ], version = "^2.0.40" }