How do you start VScode?
It might have a different view to your PATH than your shell, especially if you start it from a graphical environment rather from the terminal.
Please check the PATH logged into the console as explained by the error.
Please also check if the error persists when starting VScode from within a terminal that already is in the projects folder if you do not already open it that way. Depending on your operating system/flavor of it, you might need to run one of vscode . or code ..
