• VSCode Version: 1.67.2
• Local OS Version: Mac OS 10.15.7

Steps to Reproduce:

1. Attempt to build or rebuild the container
2. Container build/rebuild will fail with error:
   Error: ENOENT: no such file or directory, open '.../.vscode/extensions/ms-vscode-remote.remote-containers-0.238.2/Dockerfile'

This is likely not relevant to codespaces.

This is reliably happening for every container I've tested it on

Restarting VS Code does not resolve the issue

Downgrading to 0.234.0 resolves the issue. To downgrade, the install another version option is under the Uninstall button.