Does this issue occur when all extensions are disabled?: Yes

Version: 1.74.0 (user setup)
Commit: 5235c6b
Date: 2022-12-05T16:38:16.075Z
Electron: 19.1.8
Chromium: 102.0.5005.167
Node.js: 16.14.2
V8: 10.2.154.15-electron.0
OS: Windows_NT x64 10.0.19044
Sandboxed: No

Steps to Reproduce:

1. have a settings sync on GitHub.
2. have a new install of VS Code
3. on the new install configure it manually
4. turn sync on and replace the cloud version (keep local changes)
5. see that VS Code installs all extensions and changes all settings locally to the cloud ones

I cannot even recover since it only keeps cloud sync backed up

I can now reinstall VS Code and completely reconfigure it because that sync broke something in VS Code