Preserve instantiated substitution types for type variables

Author: ahejlsberg

src/compiler/checker.ts

@@ -17418,9 +17418,10 @@ namespace ts {
                 // A substitution type originates in the true branch of a conditional type and can be resolved
                 // to just the base type in the same cases as the conditional type resolves to its true branch
                 // (because the base type is then known to satisfy the constraint).
-                if (newConstraint.flags & TypeFlags.AnyOrUnknown ||
+                if (!(newBaseType.flags & TypeFlags.TypeVariable) && (
+                    newConstraint.flags & TypeFlags.AnyOrUnknown ||
                     !isGenericType(newBaseType) && !isGenericType(newConstraint) ||
-                    isTypeAssignableTo(getRestrictiveInstantiation(newBaseType), getRestrictiveInstantiation(newConstraint))) {
+                    isTypeAssignableTo(getRestrictiveInstantiation(newBaseType), getRestrictiveInstantiation(newConstraint)))) {
                     return newBaseType;
                 }
                 return getSubstitutionType(newBaseType, newConstraint);