- Install the Container Tools extension.
- Install the Docker DX extension.
- Disable the Container Tools extension.
- Command Palette > Developer: Reload Window
- Open a Dockerfile.
- Enable the Container Tools extension. You will see error toasts popup.
Essentially, this issue only happens if you install Docker DX first and then install Container Tools. If you restart this problem won't happen. From what I can tell it only triggers if you install/enable the Container Tools extension while the Docker DX extension has already been activated.

Essentially, this issue only happens if you install Docker DX first and then install Container Tools. If you restart this problem won't happen. From what I can tell it only triggers if you install/enable the Container Tools extension while the Docker DX extension has already been activated.