@hajekj: YES, IT WORKS!!! <3

Thanks so much!
You're my hero!

@Morgy: please check if the solution here works for you:
https://winscp.net/forum/viewtopic.php?t=27695#92462

Nope, but currently I'm 99% sure that the issue is related to vscode, because it only occurs with the user installer (https://github.com/Microsoft/vscode/issues/68057#issuecomment-465204156) and there's another user with the same error, but without the use of WinSCP.

Guess we can leave this here for now then. Thanks very much for help!

I have tried Store installation now. And it also works just fine.
Did you on the other hand test it with a normal installation of WinSCP?

Thanks for reply.

I'm just curious – are you using WinSCP via Microsoft Store or installed manually?
Because I am using the Microsoft Store one.

I have the exactly same setup and all works fine.

That's weird. People over at vscode say it might be a broken installation, but I reinstalled it already. =/
I'm using the 64-bit version.

I was not able to reproduce the problem. It works for me with 1.31.1.
Do you have 32-bit or 64-bit installation of VSCode?

Hello,

since the release of VSCode 1.31.1 I cannot use it as external editor anymore.
Of course I asked them for help first, but it seems that we need some help here.

Ref: https://github.com/Microsoft/vscode/issues/68057

The weird thing is that it doesn't work while pointing it directly to the .exe (or using "associated application"), but running something like

via cmd works like a charm.

So maybe one could describe how external programs are opened exactly so the vscode team can figure out what's wrong here?