Thank you @jeliasson for such a detailed response. To answer your question
I meant this: Windows Subsystem for Linux Installation Guide for Windows 10. Without trying your setup, I would guess that it not much different from mine, where I am running powershel in the “dual” (split) terminal as shown above
Note that I can change terminal tu run powershell (with VSCode settings only) in order to avoid running the VSCode in “Linux on Windows” - just as you wrote above
It is possible that your and my settings are identical (invoking the same OS API). Not being sure whether that is a true statement and remembering Aldo’s difficulties to run his VSCode extension in a “hybrid Windows / Linux” system, where VSCode might be missing some of the Windows API. I really like the Aldo’s extension described here. ( an API to explore a Redwood Project as a graph (like an AST) , which powers diagnostics and defines conventions).