Python extension fails to find user settings.json in when opened inside a container

[oscarhermoso]

Environment data

• VS Code version:
  Version: 1.60.2
  Commit: 7f6ab5485bbc008386c4386d08766667e155244e
  Date: 2021-09-22T12:01:43.795Z
  Electron: 13.1.8
  Chrome: 91.0.4472.164
  Node.js: 14.16.0
  V8: 9.1.269.39-electron.0
  OS: Linux x64 5.11.0-7620-generic
• Extension version (available under the Extensions sidebar): v2021.9.1246542782
• OS and version: OS: Linux x64 5.11.0-7620-generic
• Python version: Python 3.8.11 64-bit (mcr.microsoft.com/vscode/devcontainers/python:0.201-3.8)
• Type of virtual environment used: N/A (VS Code Dev container)
• Relevant/affected Python packages and their versions: N/A
• Relevant/affected Python-related VS Code extensions and their versions: N/A
• Value of the python.languageServer setting: "Pylance"

[NOTE: If you suspect that your issue is related to the Microsoft Python Language Server (python.languageServer: 'Microsoft'), please download our new language server Pylance from the VS Code marketplace to see if that fixes your issue]

Expected behaviour

When running the Python Extension in a dev container on a Linux desktop OS, expect python extension to read global/User settings.json from the user's home directory.

Actual behaviour

Python extension attempts to read from the home directory of the container user - vscode, and fails to find the actual settings file.

Steps to reproduce:

[NOTE: Self-contained, minimal reproducing code samples are extremely helpful and will expedite addressing your issue]

1. On a Linux computer, checkout this repo: https://github.com/oscarhermoso/vscode-unittest-failure
2. Build and open in container
3. Open Output panel, and choose Python from drop down to see stack trace failing to find location

Logs

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

Python Output

User belongs to experiment group 'pythonaacf'
User belongs to experiment group 'pythonJediLSP'
User belongs to experiment group 'pythonDiscoveryModuleWithoutWatcher'
User belongs to experiment group 'pythonTensorboardExperiment'
User belongs to experiment group 'PythonPyTorchProfiler'
User belongs to experiment group 'pythonDeprecatePythonPath'
User belongs to experiment group 'pythonSortEnvs'
User belongs to experiment group 'pythonRunFailedTestsButtonDisplayedcf'
User belongs to experiment group 'pythonRefreshTestsButtonDisplayed'
User belongs to experiment group 'pythonRememberDebugConfig'
Python interpreter path: /usr/local/bin/python
Error 2021-09-25 05:26:00: Failed to check if file needs to be fixed [EntryNotFound (FileSystemError): Unable to read file 'vscode-remote://dev-container+2f686f6d652f6368656573653835322f446f63756d656e74732f4769744875622f707974686f6e2d7673636f64652d756e6974746573742d6661696c7572652f7673636f64652d756e6974746573742d6661696c757265/home/vscode/.config/Code/User/settings.json' (Error: Unable to resolve non-existing file 'vscode-remote://dev-container+2f686f6d652f6368656573653835322f446f63756d656e74732f4769744875622f707974686f6e2d7673636f64652d756e6974746573742d6661696c7572652f7673636f64652d756e6974746573742d6661696c757265/home/vscode/.config/Code/User/settings.json')
	at _handleError (/home/vscode/.vscode-server/bin/7f6ab5485bbc008386c4386d08766667e155244e/out/vs/server/remoteExtensionHostProcess.js:94:160087)
	at processTicksAndRejections (internal/process/task_queues.js:93:5)
	at async y.readText (/home/vscode/.vscode-server/extensions/ms-python.python-2021.9.1246542782/out/client/extension.js:9:314351)
	at async p.doesFileNeedToBeFixed (/home/vscode/.vscode-server/extensions/ms-python.python-2021.9.1246542782/out/client/extension.js:59:823969)
	at async /home/vscode/.vscode-server/extensions/ms-python.python-2021.9.1246542782/out/client/extension.js:59:823096
	at async Promise.all (index 0)
	at async p.getFilesToBeFixed (/home/vscode/.vscode-server/extensions/ms-python.python-2021.9.1246542782/out/client/extension.js:59:823042)
	at async p.updateTestSettings (/home/vscode/.vscode-server/extensions/ms-python.python-2021.9.1246542782/out/client/extension.js:59:822669)] {
  code: 'FileNotFound'
}
Starting Pylance language server.
> conda --version

[oscarhermoso]

By the way, logs are similar to this closed issue.

[karthiknadig]

This is fixed via #17312