Module not found with Import-Module -UseWindowsPowerShell

Prerequisites

• I have written a descriptive issue title.
• I have searched all open and closed issues to ensure it has not already been reported.
• I have read the troubleshooting guide.
• I am sure this issue is with the extension itself and does not reproduce in a standalone PowerShell instance.
• I have verified that I am using the latest version of Visual Studio Code and the PowerShell extension.
• If this is a security issue, I have read the security issue reporting guidance.

Summary

When attempting to do an import-module with the -UseWindowsPowerShell parameter, it fails with a module not found error. The same command works fine with Windows Terminal

PowerShell Version

Name                           Value
----                           -----
PSVersion                      7.6.0
PSEdition                      Core
GitCommitId                    7.6.0
OS                             Microsoft Windows 10.0.26200
Platform                       Win32NT
PSCompatibleVersions           {1.0, 2.0, 3.0, 4.0…}
PSRemotingProtocolVersion      2.4
SerializationVersion           1.1.0.1
WSManStackVersion              3.0

Name             : Visual Studio Code Host
Version          : 2025.4.0
InstanceId       : 6ff8a005-e54f-4fc3-85f7-6d9d2c6b153b
UI               : System.Management.Automation.Internal.Host.InternalHostUserInterface
CurrentCulture   : en-US
CurrentUICulture : en-US
PrivateData      : Microsoft.PowerShell.ConsoleHost+ConsoleColorProxy
DebuggerEnabled  : True
IsRunspacePushed : False
Runspace         : System.Management.Automation.Runspaces.LocalRunspace

Visual Studio Code Version

1.113.0
cfbea10c5ffb233ea9177d34726e6056e89913dc
x64

Extension Version

ms-vscode.powershell@2025.4.0
tylerleonhardt.vscode-inline-values-powershell@0.0.7

Steps to Reproduce

1. Launch VSCode
2. Open extension terminal
3. attempt to import module:

import-module Microsoft.Online.SharePoint.PowerShell -UseWindowsPowerShell

Visuals

Logs

StartEditorServices-44892.log
PowerShell Trace LSP.log
PowerShell.log

Start by reproducing the command in the VS Code extension terminal, then inspect StartEditorServices-44892.log, PowerShell Trace LSP.log, and PowerShell.log for how Import-Module -UseWindowsPowerShell is handled. Compare the extension behavior with Windows Terminal; done means the Microsoft.Online.SharePoint.PowerShell module imports successfully in the extension terminal.