diff --git a/packages/server/src/client/daemon-client.ts b/packages/server/src/client/daemon-client.ts
index df9ed4945..f927f3fa6 100644
--- a/packages/server/src/client/daemon-client.ts
+++ b/packages/server/src/client/daemon-client.ts
@@ -2613,7 +2613,7 @@ export class DaemonClient {
       timeout: 10000,
       options: { skipQueue: true },
     });
-    if (!payload.error) {
+    if (payload.error === null) {
       this.setTerminalSlot(terminalId, payload.slot);
     }
     return payload;
diff --git a/packages/server/src/server/daemon-e2e/terminal.e2e.test.ts b/packages/server/src/server/daemon-e2e/terminal.e2e.test.ts
index 4b044fabd..73f3b5410 100644
--- a/packages/server/src/server/daemon-e2e/terminal.e2e.test.ts
+++ b/packages/server/src/server/daemon-e2e/terminal.e2e.test.ts
@@ -404,6 +404,11 @@ async function subscribeRawTerminal(
   if (message.message.type !== "subscribe_terminal_response") {
     throw new Error("Expected subscribe_terminal_response");
   }
+  if (message.message.payload.error !== null) {
+    throw new Error(
+      `Expected successful subscribe_terminal_response: ${message.message.payload.error}`,
+    );
+  }
   expect(message.message.payload).not.toHaveProperty("state");
   return message.message.payload.slot;
 }
diff --git a/packages/server/src/server/session.ts b/packages/server/src/server/session.ts
index 3d2979c1c..a68bcf37d 100644
--- a/packages/server/src/server/session.ts
+++ b/packages/server/src/server/session.ts
@@ -7661,7 +7661,6 @@ export class Session {
         type: "subscribe_terminal_response",
         payload: {
           terminalId: msg.terminalId,
-          slot: 0,
           error: "Terminal manager not available",
           requestId: msg.requestId,
         },
@@ -7675,7 +7674,6 @@ export class Session {
         type: "subscribe_terminal_response",
         payload: {
           terminalId: msg.terminalId,
-          slot: 0,
           error: "Terminal not found",
           requestId: msg.requestId,
         },
@@ -7686,11 +7684,17 @@ export class Session {
 
     const slot = this.bindActiveTerminalStream(session);
     if (slot === null) {
+      this.sessionLogger.warn(
+        {
+          terminalId: msg.terminalId,
+          activeTerminalStreamCount: this.activeTerminalStreams.size,
+        },
+        "Terminal stream slot exhaustion",
+      );
       this.emit({
         type: "subscribe_terminal_response",
         payload: {
           terminalId: msg.terminalId,
-          slot: 0,
           error: "No terminal stream slots available",
           requestId: msg.requestId,
         },
diff --git a/packages/server/src/shared/messages.ts b/packages/server/src/shared/messages.ts
index f96199bae..ee51e0b2a 100644
--- a/packages/server/src/shared/messages.ts
+++ b/packages/server/src/shared/messages.ts
@@ -2161,12 +2161,19 @@ export const CreateTerminalResponseSchema = z.object({
 
 export const SubscribeTerminalResponseSchema = z.object({
   type: z.literal("subscribe_terminal_response"),
-  payload: z.object({
-    terminalId: z.string(),
-    slot: z.number().int().min(0).max(255),
-    error: z.string().nullable(),
-    requestId: z.string(),
-  }),
+  payload: z.union([
+    z.object({
+      terminalId: z.string(),
+      slot: z.number().int().min(0).max(255),
+      error: z.null(),
+      requestId: z.string(),
+    }),
+    z.object({
+      terminalId: z.string(),
+      error: z.string(),
+      requestId: z.string(),
+    }),
+  ]),
 });
 
 export const KillTerminalResponseSchema = z.object({
diff --git a/packages/server/src/shared/terminal-stream-protocol.ts b/packages/server/src/shared/terminal-stream-protocol.ts
index 33461f367..6970b9620 100644
--- a/packages/server/src/shared/terminal-stream-protocol.ts
+++ b/packages/server/src/shared/terminal-stream-protocol.ts
@@ -84,7 +84,7 @@ export function decodeTerminalStreamFrame(bytes: Uint8Array): TerminalStreamFram
   }
   return {
     opcode,
-    slot: bytes[1] ?? 0,
+    slot: bytes[1],
     payload: bytes.subarray(2),
   };
 }