diff --git a/src/renderer/src/components/new-workspace/ProjectHostSetupCombobox.test.tsx b/src/renderer/src/components/new-workspace/ProjectHostSetupCombobox.test.tsx
index 1b9a9ba66af..cf8670a6943 100644
--- a/src/renderer/src/components/new-workspace/ProjectHostSetupCombobox.test.tsx
+++ b/src/renderer/src/components/new-workspace/ProjectHostSetupCombobox.test.tsx
@@ -21,14 +21,21 @@ vi.mock('@/components/ui/command', () => ({
   CommandList: ({ children }: { children: React.ReactNode }) => <div>{children}</div>,
   CommandItem: ({
     children,
+    disabled,
     onSelect,
     value
   }: {
     children: React.ReactNode
+    disabled?: boolean
     onSelect?: (value: string) => void
     value: string
   }) => (
-    <button type="button" data-command-value={value} onClick={() => onSelect?.(value)}>
+    <button
+      type="button"
+      data-command-value={value}
+      disabled={disabled}
+      onClick={() => onSelect?.(value)}
+    >
       {children}
     </button>
   )
@@ -54,7 +61,18 @@ const needsSetupOption: NeedsSetupProjectHostOption = {
   projectId: 'project-1',
   hostId: 'ssh:builder',
   label: 'Builder',
-  detail: 'Project not set up on this host'
+  detail: 'Project not set up on this host',
+  isAvailable: true
+}
+
+const unavailableOption: NeedsSetupProjectHostOption = {
+  id: 'needs-setup:runtime:old',
+  kind: 'needs-setup',
+  projectId: 'project-1',
+  hostId: 'runtime:old',
+  label: 'Old server',
+  detail: 'Update Orca on this host to set up projects',
+  isAvailable: false
 }
 
 beforeEach(() => {
@@ -121,4 +139,33 @@ describe('ProjectHostSetupCombobox', () => {
     expect(onValueChange).not.toHaveBeenCalled()
     expect(onNeedsSetupHostSelect).toHaveBeenCalledWith(needsSetupOption)
   })
+
+  it('keeps unavailable setup rows visible but not selectable', () => {
+    const onValueChange = vi.fn()
+    const onNeedsSetupHostSelect = vi.fn()
+
+    act(() => {
+      root.render(
+        <ProjectHostSetupCombobox
+          options={[readyOption, unavailableOption]}
+          value={readyOption.id}
+          onValueChange={onValueChange}
+          onNeedsSetupHostSelect={onNeedsSetupHostSelect}
+        />
+      )
+    })
+
+    const unavailableButton = container.querySelector<HTMLButtonElement>(
+      '[data-command-value="needs-setup:runtime:old"]'
+    )
+    expect(unavailableButton?.textContent).toContain('Update Orca on this host')
+    expect(unavailableButton?.disabled).toBe(true)
+
+    act(() => {
+      unavailableButton?.dispatchEvent(new MouseEvent('click', { bubbles: true }))
+    })
+
+    expect(onValueChange).not.toHaveBeenCalled()
+    expect(onNeedsSetupHostSelect).not.toHaveBeenCalled()
+  })
 })
diff --git a/src/renderer/src/components/new-workspace/ProjectHostSetupCombobox.tsx b/src/renderer/src/components/new-workspace/ProjectHostSetupCombobox.tsx
index fcfac39a209..bac4ab195a3 100644
--- a/src/renderer/src/components/new-workspace/ProjectHostSetupCombobox.tsx
+++ b/src/renderer/src/components/new-workspace/ProjectHostSetupCombobox.tsx
@@ -34,6 +34,9 @@ export default function ProjectHostSetupCombobox({
         return
       }
       if (option.kind === 'needs-setup') {
+        if (!option.isAvailable) {
+          return
+        }
         onNeedsSetupHostSelect?.(option)
         setOpen(false)
         return
@@ -90,6 +93,7 @@ export default function ProjectHostSetupCombobox({
                 key={option.id}
                 value={option.id}
                 onSelect={() => handleSelect(option.id)}
+                disabled={option.kind === 'needs-setup' && !option.isAvailable}
                 className="items-center gap-2 px-3 py-2"
               >
                 <Check
diff --git a/src/renderer/src/lib/project-host-setup-options.test.ts b/src/renderer/src/lib/project-host-setup-options.test.ts
index 656f66e3882..7ec54516bb6 100644
--- a/src/renderer/src/lib/project-host-setup-options.test.ts
+++ b/src/renderer/src/lib/project-host-setup-options.test.ts
@@ -96,7 +96,8 @@ describe('buildProjectHostSetupOptions', () => {
         id: 'needs-setup:ssh:builder',
         kind: 'needs-setup',
         label: 'Builder',
-        detail: 'Project not set up on this host'
+        detail: 'Project not set up on this host',
+        isAvailable: true
       })
     ])
   })
@@ -105,7 +106,10 @@ describe('buildProjectHostSetupOptions', () => {
     const options = buildProjectHostSetupOptions({
       projectId: 'project-1',
       eligibleRepos: [repo('local-repo')],
-      hosts: [host('local'), host('runtime:gpu', { label: 'GPU VM' })],
+      hosts: [
+        host('local'),
+        host('runtime:gpu', { label: 'GPU VM', capabilities: ['project-host-setup.v1'] })
+      ],
       projectHostSetups: [
         setup('local', 'project-1', 'local', 'local-repo'),
         setup('gpu-pending', 'project-1', 'runtime:gpu', '', {
@@ -122,7 +126,8 @@ describe('buildProjectHostSetupOptions', () => {
         id: 'needs-setup:runtime:gpu',
         kind: 'needs-setup',
         label: 'GPU VM',
-        detail: 'Project setup is in progress'
+        detail: 'Project setup is in progress',
+        isAvailable: true
       })
     ])
   })
@@ -137,7 +142,7 @@ describe('buildProjectHostSetupOptions', () => {
     expect(
       buildProjectHostSetupOptions({
         ...base,
-        hosts: [host('runtime:gpu', { label: 'GPU VM' })],
+        hosts: [host('runtime:gpu', { label: 'GPU VM', capabilities: ['project-host-setup.v1'] })],
         projectHostSetups: [
           ...base.projectHostSetups,
           setup('gpu-pending', 'project-1', 'runtime:gpu', '', {
@@ -152,7 +157,7 @@ describe('buildProjectHostSetupOptions', () => {
     expect(
       buildProjectHostSetupOptions({
         ...base,
-        hosts: [host('runtime:gpu', { label: 'GPU VM' })],
+        hosts: [host('runtime:gpu', { label: 'GPU VM', capabilities: ['project-host-setup.v1'] })],
         projectHostSetups: [
           ...base.projectHostSetups,
           setup('gpu-pending', 'project-1', 'runtime:gpu', '', {
@@ -167,7 +172,7 @@ describe('buildProjectHostSetupOptions', () => {
     expect(
       buildProjectHostSetupOptions({
         ...base,
-        hosts: [host('runtime:gpu', { label: 'GPU VM' })],
+        hosts: [host('runtime:gpu', { label: 'GPU VM', capabilities: ['project-host-setup.v1'] })],
         projectHostSetups: [
           ...base.projectHostSetups,
           setup('gpu-pending', 'project-1', 'runtime:gpu', '', {
@@ -179,4 +184,47 @@ describe('buildProjectHostSetupOptions', () => {
       }).at(-1)
     ).toMatchObject({ detail: 'Project is unsupported on this host' })
   })
+
+  it('marks incompatible runtime hosts as visible but unavailable', () => {
+    const options = buildProjectHostSetupOptions({
+      projectId: 'project-1',
+      eligibleRepos: [repo('local-repo')],
+      hosts: [
+        host('local'),
+        host('runtime:gpu', {
+          label: 'GPU VM',
+          health: 'blocked',
+          capabilities: ['project-host-setup.v1']
+        })
+      ],
+      projectHostSetups: [setup('local', 'project-1', 'local', 'local-repo')]
+    })
+
+    expect(options).toEqual([
+      expect.objectContaining({ id: 'local', kind: 'ready', label: 'Local Mac' }),
+      expect.objectContaining({
+        id: 'needs-setup:runtime:gpu',
+        kind: 'needs-setup',
+        label: 'GPU VM',
+        detail: 'Orca server version is incompatible',
+        isAvailable: false
+      })
+    ])
+  })
+
+  it('marks runtime hosts without project setup capability as unavailable', () => {
+    const options = buildProjectHostSetupOptions({
+      projectId: 'project-1',
+      eligibleRepos: [repo('local-repo')],
+      hosts: [host('local'), host('runtime:gpu', { label: 'GPU VM', capabilities: [] })],
+      projectHostSetups: [setup('local', 'project-1', 'local', 'local-repo')]
+    })
+
+    expect(options.at(-1)).toMatchObject({
+      id: 'needs-setup:runtime:gpu',
+      kind: 'needs-setup',
+      detail: 'Update Orca on this host to set up projects',
+      isAvailable: false
+    })
+  })
 })
diff --git a/src/renderer/src/lib/project-host-setup-options.ts b/src/renderer/src/lib/project-host-setup-options.ts
index 7e21cff9cf9..6fca5840bf9 100644
--- a/src/renderer/src/lib/project-host-setup-options.ts
+++ b/src/renderer/src/lib/project-host-setup-options.ts
@@ -4,6 +4,7 @@ import {
   type ExecutionHostId
 } from '../../../shared/execution-host'
 import type { ExecutionHostRegistryEntry } from '../../../shared/execution-host-registry'
+import { PROJECT_HOST_SETUP_RUNTIME_CAPABILITY } from '../../../shared/protocol-version'
 import type { ProjectHostSetup, Repo } from '../../../shared/types'
 
 export type ProjectHostSetupOption =
@@ -24,6 +25,7 @@ export type ProjectHostSetupOption =
       hostId: ExecutionHostId
       label: string
       detail: string
+      isAvailable: boolean
     }
 
 export type ReadyProjectHostSetupOption = Extract<ProjectHostSetupOption, { kind: 'ready' }>
@@ -124,19 +126,48 @@ function buildNeedsSetupOptions({
     .filter((host) => !readySetupByHost.has(host.id))
     .map((host) => {
       const pendingSetup = pendingSetupByHost.get(host.id)
+      const availability = getHostSetupAvailability(host)
       return {
         id: `needs-setup:${host.id}`,
         kind: 'needs-setup' as const,
         projectId,
         hostId: host.id,
         label: host.label || getExecutionHostLabel(host.id),
-        detail: pendingSetup
-          ? getPendingSetupDetail(pendingSetup)
-          : 'Project not set up on this host'
+        detail: availability.isAvailable
+          ? pendingSetup
+            ? getPendingSetupDetail(pendingSetup)
+            : 'Project not set up on this host'
+          : availability.detail,
+        isAvailable: availability.isAvailable
       }
     })
 }
 
+function getHostSetupAvailability(host: ExecutionHostRegistryEntry): {
+  isAvailable: boolean
+  detail: string
+} {
+  if (host.health === 'blocked') {
+    return {
+      isAvailable: false,
+      detail: 'Orca server version is incompatible'
+    }
+  }
+  if (
+    host.kind === 'runtime' &&
+    !host.capabilities?.includes(PROJECT_HOST_SETUP_RUNTIME_CAPABILITY)
+  ) {
+    return {
+      isAvailable: false,
+      detail: 'Update Orca on this host to set up projects'
+    }
+  }
+  return {
+    isAvailable: true,
+    detail: ''
+  }
+}
+
 function getPendingSetupDetail(setup: ProjectHostSetup): string {
   switch (setup.setupState) {
     case 'not-set-up':