Duplication of environments when using `venvFolders`

[karthiknadig]

Here's a description why Venv Folders is broken, and the time I wasted learning that fact.

I cleaned up the extra virtual environments left over from my attempts to set things up. I now have only ~/pyenv/3.12. I added pyenv to the list of Venv Folders as pyenv (since the setting says these are folders in my home directory. Now, when I select the interpreter, I see two entries for this same virtual environment:

The behavior of these two entries differs. If I select the first one, with the leading tilde, ~/pyenv/..., then again use Python: Select Interpreter, I see the second one highlighted: the one without the tilde:

Note how the text for the selected interpreter has the tilde, the highlighted one does not.

Now, if I select the second one, the one without the tilde, and again use Python: Select Interpreter, neither of the entries are highlighted:

Note that now the selected path is ./pyenv: that is, relevant to whatever VS Code's working directory happens to be. This can't be a good thing.

Just to test, I tried removing my pyenv entry from Venv Folders and added ~\pyenv instead. Now, my virtual environment does not appear in the Python: Select Interpreter` list.

So, the user has to know to select the entry with the tilde (to get an absolute path), but understand that the UI will mark the one without the tilde. I think this is just a bit confusing.

Originally posted by @paul-rogers in #24364