[WebToolsE2E][Green][v9.9] Unable to add project reference with error "There are no other projects in the solution to add a reference to"

Describe the issue

REGRESSION INFO: Works well C# DevKit Prerelease 7 Version 3.27.196(C#2.146.2)

INSTALL STEPS

OS: windows x64/MAC

1. Install the SDK 10.0.302
2. Install VS Code insiders - 1.131.0
3. Install internal main C#devkit 9.9.201(C# 2.164.2)

REPRO STEPS

1. Open vs code > Create .NET Project > Console App, then build the project
2. Ctrl+Shift+P > Create .NET Project > Class Library
3. Right Click Class Library project > Add Project Reference > Choose Console project

Note:

1. It works well when close folder, and then re-open this project folder.
2. It works well on the latest internal prerelease C# Devkit 3.27.222(prerelease branch), but could repro on the latest internal C# Devkit 9.9.207(Main branch)
3. It works well with command line

ACTUAL
Unable to add project reference

EXPECTED Reference should be added successfully

Reproduce the Add Project Reference flow in VS Code Insiders with C# Dev Kit 9.9.201, comparing it with reopening the folder and using the command line. Start from the Add Project Reference command for a Class Library and verify that the Console project is detected; done means the reference is added without reopening the folder.