Live-share: [VS Code] LiveShare does recognize a file which has # in filename as binary even file itself is not

[Alex4386]

Product and Version [VS/VSCode]: VSCode
OS Version [macOS/Windows]: Windows 10 (tested and confirmed on both Build 1709 AND 1809)
Live Share Extension Version: 0.3.1151
Target Platform or Language [e.g. Node.js]:

Steps to Reproduce / Scenario:

1. Open a file contains '#' in filename

1. Remote vscode client shows an error message saying

The file is not displayed in the editor because it is binary or uses an unsupported text encoding.

even the local vscode (liveshare host) opens the file without any encoding errors. if I click Do you want to open it anyway? to continue anyway. the vscode shows only

Unable to open this file -- only text documents are supported

Extras
Switching the sides (host and client) did NOT help at all. causing only same errors.

Screenshots

[lostintangent]

@Alex4386 Thanks for reporting this! We hadn't seen this bug before, so we'll use this issue to track resolving it 👍

[Priya91]

This should be fixed now.

[janek515]

In the newest version 1.39.0 on Windows it still pops up the same error also when there's "#" in the folder's name

[paulakfleck]

Same still happening here.