Debugger going straight to Open 'launch.json'

[gusfish-aus]

Environment data

• VS Code version: 1.98.2
• Jupyter Extension version (available under the Extensions sidebar): 2025.2.0
• Python Extension version (available under the Extensions sidebar): v2025.2.0
• Python Debugger Extension version (available under the Extensions sidebar): v2025.4.1
• OS (Windows | Mac | Linux distro) and version: Windows 11, version 24H2
• Python version: 3.12.5
• Type of virtual environment used (N/A | venv | virtualenv | conda | ...): N/A
• Jupyter server running: N/A

Expected behaviour

When I select [Debug Cell], it goes into debug mode, and then I can start running to my breakpoint

Actual behaviour

When I select [Debug Cell], it goes into debug mode and then pops-up a dialog box titled "Visual Studio Code" with button [Open 'launch.json'], per attached screenshot.
If I click that btn, VSCode indeed opens launch.json, but on returning to my Notebook Cell, no buttons are available for running in debug mode.

Steps to reproduce:

See Actual behaviour above.

Logs

Output for Jupyter in the Output panel (View→Output, change the drop-down the upper-right of the Output panel to Jupyter)

Visual Studio Code (1.98.2, undefined, desktop)
Jupyter Extension Version: 2025.2.0.
Python Extension Version: 2025.2.0.
Pylance Extension Version: 2025.3.2.
Platform: win32 (x64).
Home = c:\Users\angus
Temp Storage folder ~\AppData\Roaming\Code\User\globalStorage\ms-toolsai.jupyter\version-2025.2.0
Workspace folder ~\OneDrive\Documents\Python Scripts\TableAnalyser
11:45:47.916 [info] Starting Kernel (Python Path: ~\AppData\Local\Programs\Python\Python312\python.exe, Unknown, 3.12.5) for '~\OneDrive\Documents\Python Scripts\TableAnalyser\testdebug.ipynb' (disableUI=true)
11:45:48.303 [warn] Failed to get activated env vars for ~\AppData\Local\Programs\Python\Python312\python.exe in 268ms
11:45:48.438 [info] Process Execution: ~\AppData\Local\Programs\Python\Python312\python.exe -c "import site;print("USER_BASE_VALUE");print(site.USER_SITE);print("USER_BASE_VALUE");"
11:45:48.465 [warn] Failed to get activated env vars for ~\AppData\Local\Programs\Python\Python312\python.exe in 424ms
11:45:48.829 [info] Process Execution: ~\AppData\Local\Programs\Python\Python312\python.exe -m pip list
11:45:49.161 [info] Process Execution: ~\AppData\Local\Programs\Python\Python312\python.exe -c "import ipykernel; print(ipykernel.__version__); print("5dc3a68c-e34e-4080-9c3e-2a532b2ccb4d"); print(ipykernel.__file__)"
11:45:49.315 [info] Process Execution: ~\AppData\Local\Programs\Python\Python312\python.exe c:\Users\~\.vscode\extensions\ms-toolsai.jupyter-2025.2.0-win32-x64\pythonFiles\vscode_datascience_helpers\kernel_interrupt_daemon.py --ppid 26868
    > cwd: ~\.vscode\extensions\ms-toolsai.jupyter-2025.2.0-win32-x64\pythonFiles\vscode_datascience_helpers
11:45:50.226 [info] Process Execution: ~\AppData\Local\Programs\Python\Python312\python.exe -m ipykernel_launcher --f=c:\Users\~\AppData\Roaming\jupyter\runtime\kernel-v31840fbaf6194dbed52472a4f9432dd5aa7137674.json
    > cwd: ~\OneDrive\Documents\Python Scripts\TableAnalyser
11:45:55.014 [info] Starting debugging with mode 1
11:45:55.668 [info] Kernel successfully started
11:45:55.713 [warn] Failed to get activated env vars for ~\AppData\Local\Programs\Python\Python312\python.exe in 19ms
11:45:55.770 [info] Process Execution: ~\AppData\Local\Programs\Python\Python312\python.exe c:\Users\~\.vscode\extensions\ms-toolsai.jupyter-2025.2.0-win32-x64\pythonFiles\printJupyterDataDir.py

[gusfish-aus]

Any thoughts?