I’m having this exact same error message but mine just showed over night. I haven’t changed any of the settings, didn’t make any updates even though its prompting me to. I tried doing this but no luck.
Edit: Noticed VS Code actually has the latest version installed(1.7.3), I guess it was updated automatically 4 days ago right around the time I started experiencing this issue. I still get prompted to update to the latest version of PSU.
