Error: The connection to the ARM Template Language Server got closed. Due to Could not load file or assembly 'System.Threading, Version=8.0.0.0'

[PushyanthSoma]

When I open my arm template, it tries to start the ARM Template Language Server and after few retries, it fails with below error.

Using dotnet core executable at c:\Users\psoma\AppData\Roaming\Code\User\globalStorage\ms-dotnettools.vscode-dotnet-runtime.dotnet\8.0.17~x64\dotnet.exe
Starting ARM Template Language Server at c:\Users\psoma.vscode\extensions\msazurermtools.azurerm-vscode-tools-0.15.15\languageServer\Microsoft.ArmLanguageServer.dll
Language server nuget version: Unknown
Client options:
{
"documentSelector": [
{
"language": "arm-template",
"scheme": "file"
},
{
"language": "arm-template",
"scheme": "untitled"
}
],
"diagnosticCollectionName": "ARM Template Language Server diagnostics",
"outputChannel": {
"name": "Azure Resource Manager Tools",
"_outputChannel": {
"name": "Azure Resource Manager Tools"
},
"extensionPrefix": "azureResourceManagerTools"
},
"revealOutputChannelOn": 3,
"synchronize": {
"configurationSection": "azureResourceManagerTools"
},
"middleware": {}
}
Server options:
{
"run": {
"command": "c:\Users\psoma\AppData\Roaming\Code\User\globalStorage\ms-dotnettools.vscode-dotnet-runtime\.dotnet\8.0.17~x64\dotnet.exe",
"args": [
"c:\Users\psoma\.vscode\extensions\msazurermtools.azurerm-vscode-tools-0.15.15\languageServer\Microsoft.ArmLanguageServer.dll",
"--logLevel",
"Warning"
],
"options": {
"shell": false
}
},
"debug": {
"command": "c:\Users\psoma\AppData\Roaming\Code\User\globalStorage\ms-dotnettools.vscode-dotnet-runtime\.dotnet\8.0.17~x64\dotnet.exe",
"args": [
"c:\Users\psoma\.vscode\extensions\msazurermtools.azurerm-vscode-tools-0.15.15\languageServer\Microsoft.ArmLanguageServer.dll",
"--logLevel",
"Warning"
],
"options": {
"shell": false
}
}
}
Unhandled exception. System.IO.FileNotFoundException: Could not load file or assembly 'System.Threading, Version=8.0.0.0, Culture=neutral, PublicKeyToken=b03f5f7f11d50a3a'. The system cannot find the file specified.
File name: 'System.Threading, Version=8.0.0.0, Culture=neutral, PublicKeyToken=b03f5f7f11d50a3a'
at Microsoft.ArmLanguageServer.Program.Main(String[] args)
at System.Runtime.CompilerServices.AsyncMethodBuilderCore.Start[TStateMachine](TStateMachine& stateMachine)
at Microsoft.ArmLanguageServer.Program.Main(String[] args)
at Microsoft.ArmLanguageServer.Program.

(String[] args)
Error: The connection to the ARM Template Language Server got closed.
[Info - 11:11:33 PM] Connection to server got closed. Server will restart.
Unhandled exception. System.IO.FileNotFoundException: Could not load file or assembly 'System.Threading, Version=8.0.0.0, Culture=neutral, PublicKeyToken=b03f5f7f11d50a3a'. The system cannot find the file specified.
File name: 'System.Threading, Version=8.0.0.0, Culture=neutral, PublicKeyToken=b03f5f7f11d50a3a'
at Microsoft.ArmLanguageServer.Program.Main(String[] args)
at System.Runtime.CompilerServices.AsyncMethodBuilderCore.Start[TStateMachine](TStateMachine& stateMachine)
at Microsoft.ArmLanguageServer.Program.Main(String[] args)
at Microsoft.ArmLanguageServer.Program.(String[] args)
Error: The connection to the ARM Template Language Server got closed.
[Info - 11:11:36 PM] Connection to server got closed. Server will restart.
Unhandled exception. System.IO.FileNotFoundException: Could not load file or assembly 'System.Threading, Version=8.0.0.0, Culture=neutral, PublicKeyToken=b03f5f7f11d50a3a'. The system cannot find the file specified.
File name: 'System.Threading, Version=8.0.0.0, Culture=neutral, PublicKeyToken=b03f5f7f11d50a3a'
at Microsoft.ArmLanguageServer.Program.Main(String[] args)
at System.Runtime.CompilerServices.AsyncMethodBuilderCore.Start[TStateMachine](TStateMachine& stateMachine)
at Microsoft.ArmLanguageServer.Program.Main(String[] args)
at Microsoft.ArmLanguageServer.Program.(String[] args)
Error: The connection to the ARM Template Language Server got closed.
[Info - 11:11:39 PM] Connection to server got closed. Server will restart.
Unhandled exception. System.IO.FileNotFoundException: Could not load file or assembly 'System.Threading, Version=8.0.0.0, Culture=neutral, PublicKeyToken=b03f5f7f11d50a3a'. The system cannot find the file specified.
File name: 'System.Threading, Version=8.0.0.0, Culture=neutral, PublicKeyToken=b03f5f7f11d50a3a'
at Microsoft.ArmLanguageServer.Program.Main(String[] args)
at System.Runtime.CompilerServices.AsyncMethodBuilderCore.Start[TStateMachine](TStateMachine& stateMachine)
at Microsoft.ArmLanguageServer.Program.Main(String[] args)
at Microsoft.ArmLanguageServer.Program.(String[] args)
Error: The connection to the ARM Template Language Server got closed.
[Info - 11:11:40 PM] Connection to server got closed. Server will restart.
Unhandled exception. System.IO.FileNotFoundException: Could not load file or assembly 'System.Threading, Version=8.0.0.0, Culture=neutral, PublicKeyToken=b03f5f7f11d50a3a'. The system cannot find the file specified.
File name: 'System.Threading, Version=8.0.0.0, Culture=neutral, PublicKeyToken=b03f5f7f11d50a3a'
at Microsoft.ArmLanguageServer.Program.Main(String[] args)
at System.Runtime.CompilerServices.AsyncMethodBuilderCore.Start[TStateMachine](TStateMachine& stateMachine)
at Microsoft.ArmLanguageServer.Program.Main(String[] args)
at Microsoft.ArmLanguageServer.Program.(String[] args)
Error: The connection to the ARM Template Language Server got closed.
[Error - 11:11:40 PM] Connection to server got closed. Server will not be restarted.
Error: ARM Template Language Server: An error occurred starting the language server.

Connection to server got closed. Server will not be restarted.
Language server failed on start-up: ARM Template Language Server: An error occurred starting the language server.

Connection to server got closed. Server will not be restarted.: Error: ARM Template Language Server: An error occurred starting the language server.

Connection to server got closed. Server will not be restarted.
at c:\Users\psoma.vscode\extensions\msazurermtools.azurerm-vscode-tools-0.15.15\dist\extension.bundle.js:2:464251
at Generator.throw ()
at rejected (c:\Users\psoma.vscode\extensions\msazurermtools.azurerm-vscode-tools-0.15.15\dist\extension.bundle.js:2:453072)

I have .NET 8 SDK and runtime.

The System.Threading.dll is present under C:\Program Files\dotnet\shared\Microsoft.NETCore.App\8.0.17 folder

Tried removing the ARM template tools folder from the .vscode\extension folder and reinstalling.
Tried reinstalling the .NET 8.0.XX .NET SDK and runtime.
Tried rebooting the system multiple times.
None of these worked.