Right now, when validating an executable, the check to ensure the path is a file and not a directory comes before the check for executables in PATH. This means that a sub directory of the current process's PWD will take priority over an executable in PATH, and so an error will be given saying that the specified path "is not a file or a symlink", even if there is a valid executable in PATH which was intended to be executed.

This fix reorders the checks to ensure that the executable in PATH takes priority over a sub directory of the local PWD.

Fixes #106661 (or rather the root issue behind it, which was misdiagnosed in the thread. The error was not happening because the OS couldn't find dotnet in PATH, but because the dotnet folder in the home directory (which is usually set as the PWD when starting VSCode from an application menu) took priority over the dotnet executable that would be found in PATH.

To test that this issue is fixed:

1. Have an executable available from $PATH, such as python
2. Install an extension that has a task which runs an executable (Here is a minimal sample extension which runs python)
3. Start VSCode by running code . in a directory which contains a sub directory with the same name as the executable (in this case, python)
4. Run the task which runs the executable (called test-task in the sample extension I have uploaded)
5. Validate that the python interactive cli starts, and there is no The terminal process failed to launch: Path to shell executable "python" is not a file or a symlink. error.

Also properly fixes #79346, which is the same issue.

Also fixes #83772

The steps to test this issue are the same as specified in the original issue (which can be replaced with any executable):

1. Have dotnet in $PATH
2. Open a folder
3. Create a dotnet folder inside the root
4. Set the terminal shell as dotnet

And then of course now verify that the terminal opens and there is no: The terminal process failed to launch: Path to shell executable "dotnet" is not a file or a symlink. error popup.