macOS 26, unresponsive and whole screen wide file finder popped up from app

After update macOS to 26, and Xcode to 26, there are issues with file finder popped up from an app, not the file finder of macOS itself.

such as: when open Xcode, then click open existing project, or in a opened project, in top file menu, choose add local package dependency, in above cases, the popped out file finder is unresponsive and whole screen wide.

However, the file finder of macOS works fine, the issue is in popped up file finder from an app, such as in Xcode, swift playground, trying the locate a file in MacBook.

Even in edit this forum post, when I try to add a screen shot, press add image symbol, the popped up file finder is unresponsive and whole screen wide, same issue as in Xcode and swift playground.

what is the cause of this issue, and how to correct it?

macOS 26, unresponsive and whole screen wide file finder popped up from app
 
 
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