terminal: error when launching..Could not access starting directory

Windows Terminal version (or Windows build number)

1.8.1444.0

Other Software

• PowerToys v0.37.2 (newly installed ~2 weeks)
• Windows 10 Pro 20H2 Build 19042.985 (newly installed < 1mo.) No other issues.
• Kate 21.04.0 (newly installed ~1 week)
• Windows Terminal Settings?
  • Added paste setting
  • added color schemes
    • “Gruvbox Dark”,
    • “Gruvbox Dark Blu”,
  • Anaconda and WSL2 settings

            {
                "colorScheme": "Gruvbox Dark",
                "commandline": "cmd.exe /K %USERPROFILE%\\Miniconda3_32\\Scripts\\activate.bat",
                "guid": "{0caa0dad-35be-5f56-a8ff-afceeeaa6102}",
                "hidden": false,
                "icon": "%USERPROFILE%\\Miniconda3_32\\Menu\\Iconleak-Atrous-Console.ico",
                "name": "Anaconda Prompt (Miniconda3_32)",
                "startingDirectory": "C:\\Users\\myname",
                "tabTitle": "Anaconda (qb)"
            },
            {
                "bellStyle": "none",
                "colorScheme": "Gruvbox Dark Blu",
                "guid": "{58ad8b0c-3ef8-5f4d-bc6f-13e4c00f2530}",
                "hidden": false,
                "name": "Debian",
                "source": "Windows.Terminal.Wsl",
                "startingDirectory": "C:\\Users\\myname",
                "tabTitle": "WSL (Debian)"
            },

Steps to reproduce

This happened after latest update. I tried toggling WSL in “manage app execution aliases” as recommended in another recent post but this did not improve the broken Windows Terminal. Windows Terminal error 0x80070003 when launching `fedoraremix.exe’ #10167

Repair is not sufficient. Only Reset brings back the WSL functionality. If I reset Windows app and return to base settings then Debian works, but of course Conda is missing.

I have nearly the exact same setup on my remote work computer-- same Windows Terminal version, Windows Terminal settings (except for different path/machine name), recent installs of PowerToys and Kate. Windows 10 version on work computer is also the same. I remote into using RDP. No issues there.

I use Windows Terminal nearly every day to use Debian to SSH into remote server. Have experience no issues until yesterday.

Expected Behavior

Launch of Anaconda or WSL2 Debian

Actual Behavior

[error 0x8007010b when launching `wsl.exe -d Debian']
Could not access starting directory "C:\Users\myname"

[error 0x8007010b when launching `cmd.exe /K %USERPROFILE%\Miniconda3_32\Scripts\activate.bat']
Could not access starting directory "C:\Users\myname"