Magit status does not open files in WSL / Windows

[jsb05]

I run VS Code natively on Windows as recommended and connect to Ubuntu via WSL extension. All my code projects lie within WSL. Magit status buffer opens but navigation to a file and thus diffing doesn't work. The problem doesn't exist for files on Windows. The error message is as follows:

cannot open vscode-remote://wsl%2Bubuntu/layers/%2Bemacs/org/packages.el. Detail: Unable to read file 'vscode-remote://wsl+ubuntu/layers/+emacs/org/packages.el' (Error: Unable to resolve nonexistent file 'vscode-remote://wsl+ubuntu/layers/+emacs/org/packages.el')

Any idea how to solve this issue? I already tried to reset VS Code by deleting ~/.vscode-server on ubuntu, reinstalling Vspacecode extension and restarting the application. If it helps, VS Code was installed via scoop in Windows.

[jsb05]

For a test, I uninstalled VS code completely and installed VS Code natively on Windows using the installer from the official website. Then installed only edamagit and opened local emacs.d folder on Windows. Magit-status works as expected but files still can't be visited/opened. Please check the attached image. So it's not just WSL.