The Enter-PSHostProcess command is supposed to let you hook up the terminal or VS Code to the PSU process running Universal so if you can’t connect you won’t be able to check out variables in VS Code. The terminal isn’t returning $PSScriptRoot because it runs that command one off and not in a script.
As for the your comment on being able to run UD outside of PSU, we are working on a way to run the PowerShell side of things in VS Code to enable some of the UDStudio features similar to how we had it before. This probably won’t be out for a bit.
I think we should jump on a Zoom call though because I’d like to see what’s going on in your environment. UD and PSU seem pretty unhappy.