Steps to Reproduce:
Does this issue occur when you try this locally?: No
Does this issue occur when you try this locally and all extensions are disabled?: No


I see the same issue. I have the same versions as reporter.
Just reinstalled windows 10, everything the latest.
I have 2 WSL VSCode window open, both using one core fully (99, 98). Some kind of livelock.
Tried to revert back to VSCode 1.35, same there. Should try to older ubuntu version and see if it makes difference.

EDIT:
Installed WSL Ubuntu 18.04 and no absurd CPU usage there. So this is a quick workaround.
YES, Phenomenon appears after upgraded to WSL-Ubuntu20.04
Agreed. @csibesz07 downgrading VSCode WSL to Ubuntu 18.04 resolved the issue for me as well. I tried all of the file watching related fixes with no luck. (https://github.com/Microsoft/vscode-remote-release/issues/90)
probably due to this : https://discourse.ubuntu.com/t/ubuntu-20-04-and-wsl-1/15291
and this : https://github.com/microsoft/vscode-remote-release/issues/864
solve with patched libc6 :
wget "https://launchpadlibrarian.net/474302949/libc6_2.31-0ubuntu8+lp1871129~1_amd64.deb"
sudo dpkg -i libc6_2.31-0ubuntu8+lp1871129~1_amd64.deb
no issue with wsl2, and issue seems to be fixed in wsl1 in next version
more information in https://github.com/microsoft/WSL/issues/4898
solve with patched libc6 :
wget "https://launchpadlibrarian.net/474302949/libc6_2.31-0ubuntu8+lp1871129~1_amd64.deb"
sudo dpkg -i libc6_2.31-0ubuntu8+lp1871129~1_amd64.debno issue with wsl2, and issue seems to be fixed in wsl1 in next version
more information in microsoft/WSL#4898
Hey, it seems to be working. Thank you very much!
Most helpful comment
solve with patched libc6 :
wget "https://launchpadlibrarian.net/474302949/libc6_2.31-0ubuntu8+lp1871129~1_amd64.deb"
sudo dpkg -i libc6_2.31-0ubuntu8+lp1871129~1_amd64.deb
no issue with wsl2, and issue seems to be fixed in wsl1 in next version
more information in https://github.com/microsoft/WSL/issues/4898