GitHub Extension: Unable to resolve nonexistent file error when using GitHub in vscode.dev

[thegecko]

Does this issue occur when all extensions are disabled?: No

• VS Code Version: 1.92.2 (VS Code for web running on vscode.dev)
• OS Version: macOS 12.4

Steps to Reproduce:

1. Open a GitHub repo in vscode.dev, e.g. https://vscode.dev/github/microsoft/vscode
2. Create a new folder in the root containing another folder e.g. tmp/temp

3. Delete this folder tree using the context menu

4. Try to recreate the tmp base folder again

5. Error received: Unable to resolve nonexistent file 'vscode-vfs://github/microsoft/vscode/tmp'