The Shell interface tries to locate the Scripts folder inside python.exe.
Error line: Cannot open <Your local AppData dir>\Microsoft\WindowsAppsPythonSoftwareFoundation.Python.3.10_qbz5n2kfra8p0\python.exe\Scripts'
Reason: This can happen when you install the Python version via Microsoft store or use a user installation. Fix: uninstall the Microsoft Store version and install the standalone version from https://www.python.org/downloads/windows/
Refer to DeprecatePythonPath for more information.
TL;DR
"We removed the “python.pythonPath” setting from your settings.json file as the setting is no longer used by the Python extension. You can get the path of your selected interpreter in the Python output channel."
An alternative way is to simply select the virtual environment .venv as
the default interpreter in the workspace.
Please check known issues or file a new issue if it doesn't exist.