diff --git a/client/cody-shared/src/chat/context.ts b/client/cody-shared/src/chat/context.ts
index eab6f2ddaf7..e065459e5e3 100644
--- a/client/cody-shared/src/chat/context.ts
+++ b/client/cody-shared/src/chat/context.ts
@@ -1,4 +1,8 @@
+import { ConfigurationUseContext } from '../configuration'
+
 export interface ChatContextStatus {
+    mode?: ConfigurationUseContext
+    connection?: boolean
     codebase?: string
     filePath?: string
 }
diff --git a/client/cody-shared/src/codebase-context/index.ts b/client/cody-shared/src/codebase-context/index.ts
index d1295f2c9d6..f6b816cc9c8 100644
--- a/client/cody-shared/src/codebase-context/index.ts
+++ b/client/cody-shared/src/codebase-context/index.ts
@@ -26,19 +26,21 @@ export class CodebaseContext {
 
     public async getContextMessages(query: string, options: ContextSearchOptions): Promise<ContextMessage[]> {
         switch (this.config.useContext) {
-            case 'blended':
+            case 'embeddings' || 'blended':
                 return this.embeddings
                     ? this.getEmbeddingsContextMessages(query, options)
                     : this.getKeywordContextMessages(query, options)
-            case 'embeddings':
-                return this.getEmbeddingsContextMessages(query, options)
             case 'keyword':
                 return this.getKeywordContextMessages(query, options)
             default:
-                return []
+                return this.getEmbeddingsContextMessages(query, options)
         }
     }
 
+    public checkEmbeddingsConnection(): boolean {
+        return !!this.embeddings
+    }
+
     // We split the context into multiple messages instead of joining them into a single giant message.
     // We can gradually eliminate them from the prompt, instead of losing them all at once with a single large messeage
     // when we run out of tokens.
diff --git a/client/cody-ui/src/Chat.tsx b/client/cody-ui/src/Chat.tsx
index 9369bd9861a..59d4e5e8297 100644
--- a/client/cody-ui/src/Chat.tsx
+++ b/client/cody-ui/src/Chat.tsx
@@ -106,15 +106,15 @@ export const Chat: React.FunctionComponent<ChatProps> = ({
     )
 
     const onChatSubmit = useCallback((): void => {
-        // Submit chat only when input is not empty
-        if (formInput.trim()) {
+        // Submit chat only when input is not empty and not in progress
+        if (formInput.trim() && !messageInProgress) {
             onSubmit(formInput)
             setHistoryIndex(inputHistory.length + 1)
             setInputHistory([...inputHistory, formInput])
             setInputRows(5)
             setFormInput('')
         }
-    }, [formInput, inputHistory, onSubmit, setFormInput, setInputHistory])
+    }, [formInput, inputHistory, messageInProgress, onSubmit, setFormInput, setInputHistory])
 
     const onChatKeyDown = useCallback(
         (event: React.KeyboardEvent<HTMLDivElement>): void => {
diff --git a/client/cody-ui/src/chat/TranscriptItem.module.css b/client/cody-ui/src/chat/TranscriptItem.module.css
index dcaf287bacf..98bd25d6498 100644
--- a/client/cody-ui/src/chat/TranscriptItem.module.css
+++ b/client/cody-ui/src/chat/TranscriptItem.module.css
@@ -51,8 +51,7 @@
 .actions {
     display: flex;
     flex-direction: column;
-    align-items: flex-start;
-    gap: calc(var(--spacing) * 0.5);
+    align-items: center;
     padding: 0 var(--spacing);
 }
 
@@ -61,6 +60,7 @@
     word-break: break-word;
     line-height: 150%;
 }
+
 .content pre {
     padding: calc(var(--spacing) * 0.5);
     overflow-x: auto;
diff --git a/client/cody-ui/src/chat/TranscriptItem.tsx b/client/cody-ui/src/chat/TranscriptItem.tsx
index 76416d0fbb6..2f1b2b5362e 100644
--- a/client/cody-ui/src/chat/TranscriptItem.tsx
+++ b/client/cody-ui/src/chat/TranscriptItem.tsx
@@ -92,7 +92,9 @@ export const TranscriptItem: React.FunctionComponent<
             {message.displayText ? (
                 <CodeBlocks displayText={message.displayText} copyButtonClassName={codeBlocksCopyButtonClassName} />
             ) : inProgress ? (
-                <BlinkingCursor />
+                <span>
+                    Fetching context... <BlinkingCursor />
+                </span>
             ) : null}
         </div>
     </div>
diff --git a/client/cody-ui/src/chat/actions/TranscriptAction.module.css b/client/cody-ui/src/chat/actions/TranscriptAction.module.css
index bd85337fe1d..90c37084d6c 100644
--- a/client/cody-ui/src/chat/actions/TranscriptAction.module.css
+++ b/client/cody-ui/src/chat/actions/TranscriptAction.module.css
@@ -2,6 +2,7 @@
     display: inline-block;
     padding: 0.4rem 0.4rem 0.3rem 0.7rem;
     font-size: 0.9rem;
+    min-width: calc(100% - 1.1rem);
 }
 .container-open {
     padding-bottom: 0.6rem;
@@ -16,7 +17,7 @@
     align-items: center;
     gap: 0.2rem;
     cursor: pointer;
-
+    width: 100%;
     padding: 0;
     appearance: none;
     background: none;
@@ -24,6 +25,7 @@
     outline: none;
     color: currentColor;
     font-family: inherit;
+    justify-content: space-between;
 }
 .open-close-icon {
     opacity: 0.8;
diff --git a/client/cody-ui/src/chat/inputContext/ChatInputContext.module.css b/client/cody-ui/src/chat/inputContext/ChatInputContext.module.css
index 9dbe3543c40..1e87412d10f 100644
--- a/client/cody-ui/src/chat/inputContext/ChatInputContext.module.css
+++ b/client/cody-ui/src/chat/inputContext/ChatInputContext.module.css
@@ -46,3 +46,12 @@
     text-overflow: ellipsis;
     overflow: hidden;
 }
+
+.fail {
+    display: inline-flex;
+    align-items: center;
+    gap: 0.25rem;
+    overflow: hidden;
+
+    color: var(--vscode-errorForeground, red);
+}
diff --git a/client/cody-ui/src/chat/inputContext/ChatInputContext.tsx b/client/cody-ui/src/chat/inputContext/ChatInputContext.tsx
index ec4c1d98bb9..adc287f1c09 100644
--- a/client/cody-ui/src/chat/inputContext/ChatInputContext.tsx
+++ b/client/cody-ui/src/chat/inputContext/ChatInputContext.tsx
@@ -1,6 +1,6 @@
 import React, { useMemo } from 'react'
 
-import { mdiFileDocumentOutline, mdiSourceRepository } from '@mdi/js'
+import { mdiFileDocumentOutline, mdiSourceRepository, mdiFileExcel } from '@mdi/js'
 import classNames from 'classnames'
 
 import { ChatContextStatus } from '@sourcegraph/cody-shared/src/chat/context'
@@ -19,9 +19,9 @@ export const ChatInputContext: React.FunctionComponent<{
             [
                 contextStatus.codebase
                     ? {
-                          icon: mdiSourceRepository,
+                          icon: contextStatus.connection ? mdiSourceRepository : mdiFileExcel,
                           text: basename(contextStatus.codebase.replace(/^(github|gitlab)\.com\//, '')),
-                          tooltip: contextStatus.codebase,
+                          tooltip: contextStatus.connection ? contextStatus.codebase : 'connection failed',
                       }
                     : null,
                 contextStatus.filePath
@@ -32,12 +32,14 @@ export const ChatInputContext: React.FunctionComponent<{
                       }
                     : null,
             ].filter(isDefined),
-        [contextStatus.codebase, contextStatus.filePath]
+        [contextStatus.codebase, contextStatus.connection, contextStatus.filePath]
     )
 
     return (
         <div className={classNames(styles.container, className)}>
-            <h3 className={styles.badge}>{items.length > 0 ? 'Context' : 'No context'}</h3>
+            <h3 className={styles.badge}>
+                {contextStatus.mode && contextStatus.connection ? 'Embeddings' : 'Keyword'}
+            </h3>
             {items.length > 0 && (
                 <ul className={styles.items}>
                     {items.map(({ icon, text, tooltip }, index) => (
@@ -56,7 +58,7 @@ const ContextItem: React.FunctionComponent<{ icon: string; text: string; tooltip
     tooltip,
     as: Tag,
 }) => (
-    <Tag className={styles.item}>
+    <Tag className={tooltip === 'connection failed' ? styles.fail : styles.item}>
         <Icon svgPath={icon} className={styles.itemIcon} />
         <span className={styles.itemText} title={tooltip}>
             {text}
diff --git a/client/cody/src/chat/ChatViewProvider.ts b/client/cody/src/chat/ChatViewProvider.ts
index 38ddbfdc665..31581ad32c5 100644
--- a/client/cody/src/chat/ChatViewProvider.ts
+++ b/client/cody/src/chat/ChatViewProvider.ts
@@ -37,7 +37,7 @@ export async function isValidLogin(
 
 type Config = Pick<
     ConfigurationWithAccessToken,
-    'codebase' | 'serverEndpoint' | 'debug' | 'customHeaders' | 'accessToken'
+    'codebase' | 'serverEndpoint' | 'debug' | 'customHeaders' | 'accessToken' | 'useContext'
 >
 
 export class ChatViewProvider implements vscode.WebviewViewProvider, vscode.Disposable {
@@ -318,6 +318,8 @@ export class ChatViewProvider implements vscode.WebviewViewProvider, vscode.Disp
             void this.webview?.postMessage({
                 type: 'contextStatus',
                 contextStatus: {
+                    mode: this.config.useContext,
+                    connection: this.codebaseContext.checkEmbeddingsConnection(),
                     codebase: this.config.codebase,
                     filePath: editorContext ? vscode.workspace.asRelativePath(editorContext.filePath) : undefined,
                 },
diff --git a/client/cody/src/external-services.ts b/client/cody/src/external-services.ts
index b17738720e7..19e7c17940f 100644
--- a/client/cody/src/external-services.ts
+++ b/client/cody/src/external-services.ts
@@ -1,3 +1,5 @@
+import { window } from 'vscode'
+
 import { ChatClient } from '@sourcegraph/cody-shared/src/chat/chat'
 import { CodebaseContext } from '@sourcegraph/cody-shared/src/codebase-context'
 import { ConfigurationWithAccessToken } from '@sourcegraph/cody-shared/src/configuration'
@@ -41,6 +43,7 @@ export async function configureExternalServices(
             `Cody could not find the '${initialConfig.codebase}' repository on your Sourcegraph instance.\n` +
             'Please check that the repository exists and is entered correctly in the cody.codebase setting.'
         console.error(errorMessage)
+        void window.showErrorMessage(errorMessage)
     }
     const embeddingsSearch = repoId && !isError(repoId) ? new SourcegraphEmbeddingsSearchClient(client, repoId) : null
 
diff --git a/client/cody/src/main.ts b/client/cody/src/main.ts
index 0c33ee5f94b..b2fb9ae3501 100644
--- a/client/cody/src/main.ts
+++ b/client/cody/src/main.ts
@@ -54,9 +54,19 @@ export async function start(context: vscode.ExtensionContext): Promise<vscode.Di
             }
         }),
         vscode.workspace.onDidChangeConfiguration(async event => {
-            if (event.affectsConfiguration('cody') || event.affectsConfiguration('sourcegraph')) {
+            if (event.affectsConfiguration('cody')) {
                 onConfigurationChange(await getFullConfig())
             }
+            if (event.affectsConfiguration('cody.codebase')) {
+                const action = await vscode.window.showInformationMessage(
+                    'You must reload VS Code for Cody to pick up your new codebase.',
+                    'Reload VS Code',
+                    'Close'
+                )
+                if (action === 'Reload VS Code') {
+                    void vscode.commands.executeCommand('workbench.action.reloadWindow')
+                }
+            }
         })
     )
 
@@ -161,13 +171,6 @@ const register = async (
             await secretStorage.delete(CODY_ACCESS_TOKEN_SECRET)
             logEvent('CodyVSCodeExtension:codyDeleteAccessToken:clicked')
         }),
-        // TOS
-        vscode.commands.registerCommand('cody.accept-tos', version =>
-            localStorage.set('cody.tos-version-accepted', version)
-        ),
-        vscode.commands.registerCommand('cody.get-accepted-tos-version', () =>
-            localStorage.get('cody.tos-version-accepted')
-        ),
         // Commands
         vscode.commands.registerCommand('cody.focus', () => vscode.commands.executeCommand('cody.chat.focus')),
         vscode.commands.registerCommand('cody.settings', () => chatProvider.setWebviewView('settings')),
diff --git a/client/cody/webviews/App.css b/client/cody/webviews/App.css
index 416bd1c0e28..c9ec35cfa51 100644
--- a/client/cody/webviews/App.css
+++ b/client/cody/webviews/App.css
@@ -24,4 +24,28 @@ button {
     flex-direction: column;
     overflow: auto;
     flex: 1;
-}
\ No newline at end of file
+}
+
+.error {
+    flex-direction: row;
+    display: flex;
+    margin: 0.5em;
+    padding: 1rem;
+    color: var(--vscode-input-foreground);
+    background-color: var(--vscode-inputValidation-errorBackground);
+    border: 2px solid var(--vscode-inputValidation-errorBorder);
+    justify-content: space-between;
+    align-items: center;
+    min-height: 2rem;
+    position: relative;
+}
+
+.close-btn {
+    position: absolute;
+    top: 0;
+    right: 0;
+    background: none;
+    border: none;
+    color: var(--vscode-input-foreground);
+    cursor: pointer;
+}
diff --git a/client/cody/webviews/App.tsx b/client/cody/webviews/App.tsx
index 6dd2d97b16b..c7f4446cac9 100644
--- a/client/cody/webviews/App.tsx
+++ b/client/cody/webviews/App.tsx
@@ -28,6 +28,7 @@ export const App: React.FunctionComponent<{ vscodeAPI: VSCodeWrapper }> = ({ vsc
     const [inputHistory, setInputHistory] = useState<string[] | []>([])
     const [userHistory, setUserHistory] = useState<ChatHistory | null>(null)
     const [contextStatus, setContextStatus] = useState<ChatContextStatus | null>(null)
+    const [errorMessage, setErrorMessage] = useState<string>('')
 
     useEffect(() => {
         vscodeAPI.onMessage(message => {
@@ -65,6 +66,16 @@ export const App: React.FunctionComponent<{ vscodeAPI: VSCodeWrapper }> = ({ vsc
                     break
                 case 'contextStatus':
                     setContextStatus(message.contextStatus)
+                    if (message.contextStatus.mode !== 'keyword' && !message.contextStatus?.codebase) {
+                        setErrorMessage(
+                            'Codebase is missing. A codebase must be provided via the cody.codebase setting to enable embeddings. Failling back to local keyword search for context.'
+                        )
+                    }
+                    if (message.contextStatus?.codebase && !message.contextStatus?.connection) {
+                        setErrorMessage(
+                            'Codebase connection failed. Please make sure the codebase in your cody.codebase setting is correct and exists in your Sourcegraph instance. Falling back to local keyword search for context.'
+                        )
+                    }
                     break
                 case 'view':
                     setView(message.messages)
@@ -102,7 +113,7 @@ export const App: React.FunctionComponent<{ vscodeAPI: VSCodeWrapper }> = ({ vsc
             {view === 'login' && (
                 <Login onLogin={onLogin} isValidLogin={isValidLogin} serverEndpoint={config?.serverEndpoint} />
             )}
-            {view && view !== 'login' && <NavBar view={view} setView={setView} devMode={Boolean(config?.debug)} />}
+            {view !== 'login' && <NavBar view={view} setView={setView} devMode={Boolean(config?.debug)} />}
             {view === 'debug' && config?.debug && <Debug debugLog={debugLog} />}
             {view === 'history' && (
                 <UserHistory
@@ -116,6 +127,14 @@ export const App: React.FunctionComponent<{ vscodeAPI: VSCodeWrapper }> = ({ vsc
             {view === 'settings' && (
                 <Settings setView={setView} onLogout={onLogout} serverEndpoint={config?.serverEndpoint} />
             )}
+            {view === 'chat' && errorMessage && (
+                <div className="error">
+                    Error: {errorMessage}
+                    <button type="button" onClick={() => setErrorMessage('')} className="close-btn">
+                        ×
+                    </button>
+                </div>
+            )}
             {view === 'chat' && (
                 <Chat
                     messageInProgress={messageInProgress}
diff --git a/client/cody/webviews/Chat.module.css b/client/cody/webviews/Chat.module.css
index 0c91d16036c..b7a0a99ff6f 100644
--- a/client/cody/webviews/Chat.module.css
+++ b/client/cody/webviews/Chat.module.css
@@ -38,6 +38,7 @@ body[data-vscode-theme-kind='vscode-high-contrast'] .human-transcript-item {
 .transcript-action {
     background: var(--button-secondary-background);
     color: var(--button-secondary-foreground);
+    font-size: var(--vscode-editor-font-size);
 }
 
 .code-blocks-copy-button {