- Create empty folder - `git init` (This only reproes when a git repo is present) - Add a folder foo/ - Add a file inside that folder test.ts - Type something like invalid syntax in test.ts so that it has TS errors - See that folder `foo` is highlighted red in the explorer - In the file explorer, delete ~~`foo`~~ `test.ts` - `foo` is still red!  Doesn't repro in 1.28