Change:
eventOrOptions.cwd = workspace.uri; const cwdConfig = configurationService.getValue(TerminalSettingId.Cwd, { resource: workspace.uri }); if (typeof cwdConfig === 'string' && cwdConfig.length > 0) { <del> if (isAbsolute(cwdConfig)) { </del> <ins> if (isAbsolute(cwdConfig) || cwdConfig.startsWith(AbstractVariableResolverService.VARIABLE_LHS)) { </ins> eventOrOptions.cwd = URI.from({ scheme: workspace.uri.scheme, path: cwdConfig

Discussion:
Issue Type: <bBug</bworkspace file Create the other folder. it in Visual Studio Code on Windows  New Terminal, select 'scripts' error: The terminal process failed to launch: Starting directory (cwd) "D:sourcesappscriptsD:sourcesappscripts" does not exist. VS Code version: Code - Insiders 1.62.0-insider (, 2021-10-29T05:16:23.014Z) OS version: WindowsNT x64 10.0. Restricted Mode: No <details<summarySystem Info</summary </details<!-- generated by issue reporter --
Can you share your file and also do a trace log while creating a terminal?
Thanks, I don't see any logs indicating an attempt was made to create a terminal. Can you pls try again and capture the logs associated with that?
should i wait before logs are written?
You should try to create the terminal (reproduce the bug) and then copy the logs which should contain information about the process
sorry, I missed important setting in repro. I've created reproducible sample. Unpack it and open workspace file. And then try to open any terminal Seems like error is not stored in logs.

I see [2021-10-29 17:40:03.486] [renderer1] [trace] RequestService#request [2021-10-29 17:40:03.525] [renderer1] [trace] {"name":"EntryNotFound (FileSystemError)"} [2021-10-29 17:40:03.525] [renderer1] [trace] {"name":"EntryNotFound (FileSystemError)"} [2021-10-29 17:40:04.960] [renderer1] [trace] CommandService#executeCommand [2021-10-29 17:40:04.960] [renderer1] [trace] CommandService#executeCommand _workbench.pickWorkspaceFolder [2021-10-29 17:40:06.367] [renderer1] [trace] terminalInstance#ctor (instanceId: 1) {"cwd":{"{workspaceFolder}","scheme":"file"}} [2021-10-29 17:40:06.572] [renderer1] [debug] Terminal process exit (instanceId: 1) with code undefined [2021-10-29 17:40:06.572] [renderer1] [debug] Terminal process exit (instanceId: 1) state 2 [2021-10-29 17:40:06.572] [renderer1] [trace] terminalInstance#dispose (instanceId: 1)
I've updated bug description with missing part
I have reproduced a similar issue when setting
The issue seems to be caused by commit I have replied here
In the latest insider build this bug it still reproduced with the exact same steps. However folder is different. Before fix it concatenated it this way for folder "scripts" "D:sourcesappscriptsD:sourcesappscripts" After fix you can see the results below on screenshots: This is shown when I try to open 'scripts' folder (from steps in bug) ! This is shown when I try to open 'other' folder (from steps in bug) ! As I can see, concatenation of relative paths became broken. Should we reopen it?
good point, thanks for raising this. Didn't check the version info hard enough in your report
I want to add some words of appreciation of VS Code.

I'm using it for 4 years already and incredibly happy about it. And thinking about lots of efforts in the background that you and other team members are putting to make this masterpiece editor, I feel envy that I'm not moving the entire world of development forward like you guys...