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This error is happening because the Functions project is automatically created in an "api" folder rather than the root of your project.
With this #54, the dialog will no longer come up and it will just create the project in an "api" folder. I think that this issue should be considered fixed after merging.
OS: Windows
Build Version: 0.1.0-alpha
Repro Steps:
Expect:
Succeed to create the endpoint for the function project.
Actual:
A confusing dialog "The selected folder is not a function project. Create new project?" pops up.
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