Error: EIO: i/o error, stat '/workspaces/repo'

• VSCode Version: 1.63.2
• Local OS Version: Windows 11 (22000.318)
• Remote OS Version: Ubuntu 20.04
• Remote Extension/Connection Type: Docker
• Docker Desktop Version: 4.3.1
• Logs:

devcontainer.json:

{
	"name": "azure-management",
	"build": {
		"dockerfile": "Dockerfile",
	},

	// Set *default* container specific settings.json values on container create.
	"settings": {
		"terminal.integrated.shell.linux": "pwsh"
	},

	// Add the IDs of extensions you want installed when the container is created.
	// Note that some extensions may not work in Alpine Linux. See https://aka.ms/vscode-remote/linux.
	"extensions": ["ms-vscode.powershell","ms-vscode.azure-account","ms-dotnettools.dotnet-interactive-vscode","hashicorp.terraform"],

	// Use 'forwardPorts' to make a list of ports inside the container available locally.
	// "forwardPorts": [],

	// Use 'postCreateCommand' to run commands after the container is created.
    //"postCreateCommand": "uname -a",

	"mounts": ["source=${localEnv:USERPROFILE}//.ssh,target=/home/vscode/.ssh,type=bind,consistency=cached","source=c://git//repos,target=/workspaces/repos,type=bind,consistency=cached"],

	// Comment out connect as root instead. More info: https://aka.ms/vscode-remote/containers/non-root.
	"remoteUser": "vscode"
}

Dockerfile:

FROM mcr.microsoft.com/powershell:7.2.1-ubuntu-focal

RUN apt-get update && apt-get -y upgrade

RUN apt-get update && apt-get install -y \
    wget \
    unzip \
    ca-certificates \
    apt-transport-https \
    lsb-release \
    gnupg \
	curl \
    && rm -rf /var/lib/apt/lists/*

# Prerequisite for .NET Interactive Notebooks: https://marketplace.visualstudio.com/items?itemName=ms-dotnettools.dotnet-interactive-vscode
# https://docs.microsoft.com/en-gb/dotnet/core/install/linux-ubuntu#2004-
RUN wget https://packages.microsoft.com/config/ubuntu/20.04/packages-microsoft-prod.deb -O packages-microsoft-prod.deb && dpkg -i packages-microsoft-prod.deb && rm packages-microsoft-prod.deb
RUN apt-get update && apt-get install -y dotnet-sdk-6.0

# Switch to non-root user:
RUN useradd --create-home vscode
WORKDIR /home/vscode
USER vscode

Steps to Reproduce:

1. Re-open a folder in a dev container based on the above devcontainer.json and Dockerfile
2. Try to open a file from a mounted directory under /workspaces, either the custom bind mount or the auto mount point for the directory/repo being re-opened in the container
3. The following pops up: "Error: EIO: i/o error, stat '/workspaces/repos/test.txt'"

Does this issue occur when you try this locally?: N/A
Does this issue occur when you try this locally and all extensions are disabled?: N/A

I have tried to reproduce on another machine with the same versions as listed above, and I can`t seem to reproduce there. Hence, I am thinking it might be something related to the other machine - which has worked just fine with dev-containers up until now.