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Thank you for reporting this. We are tracking these under a single issue (64). The vscode tool for installing .net requires powershell scripting to be enabled and we are providing feedback to them on that. There is also an FAQ on other possible causes available here: https://github.com/dotnet/vscode-dotnet-runtime/blob/main/Documentation/troubleshooting-runtime.md. If you get logs and these don't resolve them, please let us know.
Does this occur consistently?
Repro steps:
Action: azextAgent.activate
Error type: Error
Error Message: Failed to acquire .NET runtime
Version: 0.3.61
OS: win32
OS Release: 10.0.26100
Product: Visual Studio Code
Product Version: 1.96.2
Language: en
Call Stack
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