Upload fails on ESP32 USB connection when file is in subdirectory

[TRadigk]

Hi,

I wonder if this repo/extension is still active...

I've been using this expansion for some months now and I had no issues with Raspberry Pico or ESP32 over serial, when uploading files. Today I got my hands on a Seeed Xiao ESP32 which is directly connected to ESP32 USB. I've flashed micropython v1.2.0 for ESP32 USB and successfully connected to the device in VS Code using this extension. So far, everything is okay:

But today I got a problem: uploading a file, which is located within a folder (of the project) the upload stops / hangs forever.
OF course this is the latest VS Code (v1.78.1) and extension (v2.22.5) and please remember the same project can be uploaded without issues in the same window to a RP2040 device or any other ESP32 connected over an serial/USB Bridge.

This is how VS Code looks in the "stuck" state:

The device is stuck as well at this point and can only be recovered via reset on the board.

I then went ahead and tried to upload my project with Thonny (4.0.1) - worked without any issue.
A single upload of the same file e.g. boot.py which is on the root folder that is opened in vs code (and which represents my workspace) works without issues.
After a reset, uploading a file located in a folder, it looks like this: