You may need to select “DebugGame” or the “DebugGameEditor” configuration in VS Code. The first is for launching the game by itself (without the editor and closer to what a packaged build for players would look like), and the second one is for launching in the editor, which is probably what you need.
“Debug” by itself is if you were building the engine from source and debugging it as well as your game.
Found this possibly related post: Targets cannot be built in the Debug configuration with this engine distribution - Unreal Courses / Ask - GameDev.tv
Build configuration documentation: Build Configurations Reference for Unreal Engine | Unreal Engine 5.3 Documentation