Variables, defined with "-Option AllScope", in Nested Function reports "assigned but never used".

Issue Description

I'm learning PowerShell, and also new to Visual Studio Code, and ran into a situation where it would be useful to create nested functions that access the parent function's variables. To my pleasant surprise PowerShell can do this and I created the below code to try it out. But Visual Studio Code continues to complain "The variable 'Data' is assigned but never used." and "The variable 'Return' is assigned but never used." But PowerShell itself seems to be quite happy with the code and produces the results I expected.

It appears that Visual Studio code is not recognizing the work that "Set-Variable", with the "AllScope" option, does in making these variables accessible throughout the GetMatchingIndex method (I wouldn't be surprised if "AllScope" makes it accessible outside the class - coming from a C# background, PowerShell does some really weird things).

If VSCode is working correctly, and there really are 2 bugs in my code, then I guess I need someone to explain how to fix the code.

class FERMI {   # ForEachReturnMatchingIndex
    [string[]]$CharSets
    FERMI() {
        $this.CharSets = 'ab', 'cd', 'ef', 'gh'
    }
    [int] GetMatchingIndex([string]$StringToFind) {
        Write-Host
        Set-Variable -Name ItemIndex, UpperOuterBounds, Data, Return -Option AllScope
        [int]$Return = [int]$ItemIndex = -1
        $UpperOuterBounds = $this.CharSets.Length
        function AbleToGetAnotherItem {
            [OutputType([bool])]
            param ()
            if ($atgaiReturn = ++$ItemIndex -lt $UpperOuterBounds) { $Data = $this.CharSets[$ItemIndex]}
            return $atgaiReturn
        }
        function ProcessData {
            Write-Host "Data: $Data, Index: $ItemIndex"
            if($Data -eq $StringToFind){
                $Return = $ItemIndex
            }
        }
        While (AbleToGetAnotherItem) {
            ProcessData
        }
        return $Return
    }
}

[FERMI] $MyFERMI = [FERMI]::New()
Write-Host "ef: $($MyFERMI.GetMatchingIndex('ef'))"
Write-Host "cd: $($MyFERMI.GetMatchingIndex('cd'))"
Write-Host "ij: $($MyFERMI.GetMatchingIndex('ij'))"
Write-Host "gh: $($MyFERMI.GetMatchingIndex('gh'))"
Write-Host "ab: $($MyFERMI.GetMatchingIndex('ab'))"

Environment Information

Visual Studio Code

PowerShell Information

Visual Studio Code Extensions

Start by running the supplied FERMI PowerShell reproduction with the reported PowerShell and VS Code extension versions, then inspect how the analyzer tracks variables created with Set-Variable -Option AllScope inside nested functions. Done means the diagnostics correctly account for the variables' uses, or the issue clearly documents why the warnings are valid.