Change:
existingIconNode.remove(); } <del> this.domNode.className = labelClasses.join(' '); </del> <ins> this.domNode.classNames = labelClasses; </ins> this.domNode.element.setAttribute('aria-label', ariaLabel); <del> this.labelContainer.className = containerClasses.join(' '); </del> <ins> this.labelContainer.classList.value = ''; this.labelContainer.classList.add(...containerClasses); </ins> this.setupHover(options?.descriptionTitle ? this.labelContainer : this.element, options?.title); this.nameNode.setLabel(label, options);

Discussion:
Type: <bBug</bIf you rename a folder to "Cut Sheet" for example, that folder and anything below it becomes a "greyed" out folder. If you have a file that is named "Cut " for example, this is also greyed out. Renaming any of these makes them a normal folder/item icon. I have confirmed that this is not a .gitignore issue, nor does it appear to be a theme issue. Please see the image below. ! VS Code version: Code 1.91.1 (, 2024-07-09T22:06:49.809Z) OS version: WindowsNT x64 10.0. Modes: <details<summarySystem Info</summary </details<details<summaryExtensions (81)</summaryExtensionVersion ------ amazon-q-vscode1.17.0 vscode-intelephense-client1.10.4 phpserver3.0.2 vscode-yarn-script0.0.1 path-intellisense2.9.0 codeium1.10.1 doxdocgen1.4.0 vscode-markdownlint0.55.0 composer-php-vscode1.49. intelli-php-vscode0.12. phptools-vscode1.49. profiler-php-vscode1.49. xml2.5.1 gitlens15.2.1 vscode-html-css2.0.10 EditorConfig0.16.4 prettier-vscode10.4.0 vscode-yarn2.1.0 copilot1.218.0 copilot-chat0.17.1 remotehub0.62.0 vscode-pull-request-github0.92.0 gc-excelviewer4.2.59 todo-tree0.0.226 vscode-test-explorer2.21.1 better-cpp-syntax1.27.1 vscode-nuget-package-manager1.1.6 cmake-language-support-vscode0.0.9 vscode-autohotkey-plus-plus5.0.5 rainbow-csv3.12.0 compare-folders0.24.3 vscode-docker1.29.1 csdevkit1.8.14 csharp2.39.29 vscode-dotnet-runtime2.1.1 vscodeintellicode-csharp2.1.11 debugpy2024.8.0 gather2022.3.

2 isort2023.10.1 python2024.10.0 vscode-pylance2024.7.1 jupyter2024.6.0 jupyter-keymap1.1.2 jupyter-renderers1.0.18 vscode-jupyter-cell-tags0.1.9 vscode-jupyter-slideshow0.1.6 remote-containers0.379.0 remote-ssh0.112.0 remote-ssh-edit0.86.0 remote-wsl0.88.2 cmake-tools1.18.43 cpptools1.21.3 cpptools-extension-pack1.3.0 live-server0.4.14 powershell2024.2.2 remote-explorer0.4.3 remote-repositories0.40.0 remote-server1.5.2 test-adapter-converter0.1.9 vscode-speech0.10.0 vsliveshare1.0.5936 indent-rainbow8.3.1 word-count0.1.0 material-icon-theme5.8.0 LiveServer5.7.9 vscode-vba0.11.0 logos-vscode1.0.1 pdf1.2.2 cmake0.0.17 highlight-matching-tag0.11.0 intellicode-api-usage-examples0.2.8 vscodeintellicode1.3.1 vscode-gradle3.15.0 vscode-java-debug0.58.0 vscode-java-dependency0.24.0 vscode-java-pack0.27.0 vscode-maven0.44.0 vscode-todo-highlight1.0.5 php-debug1.35.0 php-pack1.0.3 php-intellisense1.3.3 (1 theme extensions excluded) </details<details<summaryA/B Experiments</summary</details<!-- generated by issue reporter --
/needsMoreInfo Is it reproducible with all extensions disabled? You can try this with <kbdF1</kbdand Do you have mentioned in setting for user or workspace or do you have it in ignore file?
Thanks for creating this issue! We figured it's missing some basic information or in some other way doesn't follow our . Please take the time to review these and update the issue. Happy Coding!
It still occurs when I reload window with extensions disabled.

And I do not have mentioned in my files.exclude in my user or workspace settings JSON. My workspace does not have a a files.exclude. My user settings has the following: "files.exclude": { "/.classpath": true, "/.project": true, "/.settings": true, "/.factorypath": true }, See attached image showing extensions disabled and both files. ! And here's a picture of my .gitignore file: !
Same problem here !
PR fixing it
Fix reverted by