Failing to automatically Activate .venv

[successhawk]

I have a script that automatically creates a .venv in the project on VSCode folder open. However, I am not able to get VS Code (Python extension) to automatically recognize it and activate it in terminal without the user having to activate or take some action. I get a pop up and have to click Yes, and I am not sure where that setting is stored.

Also, the project's .vscode/settings file is tracked in git, and I don't want the interpreter path to be stored because python executable paths are different across platforms.
I am open to any proposed solutions.

Here is the .vscode/settings file that is tracked.

{
    "python.terminal.activateEnvironment": true,
    "python.testing.pytestEnabled": true,
    "python.testing.unittestEnabled": false,
    "python.testing.pytestArgs": [
        "tests"
    ],
    "python.analysis.typeCheckingMode": "standard",
    "editor.formatOnSave": true,
    "editor.codeActionsOnSave": {
        "source.organizeImports": "explicit"
    },
    "[python]": {
        "editor.formatOnSave": true,
        "editor.codeActionsOnSave": {
            "source.organizeImports": "explicit"
        }
    },
    "files.exclude": {
        "**/__pycache__": true,
        "**/*.pyc": true,
        "**/.pytest_cache": true
    },
    "cSpell.words": [
        "isort",
        "itertracks",
        "libmp",
        "librosa",
        "mypy",
        "pipdeptree",
        "pydub",
        "pytestmark",
        "torchaudio",
        "torchvision"
    ]
}

[successhawk]

This might be a bug, but I "fixed" it in my environment while I was writing up the question by changing the following setting to true in my user settings.
"python.terminal.activateEnvironment": false,
It is my understanding that the Workspace folder settings is supposed to override the user level settings.
Unfortunately, I was not able to reproduce it by adding the user setting back and setting to true. However, this was the only change that I made between tests. Where I was deleting the entire repo, cloning and opening vs code in the folder ever test. Prior to making that change I had done the process at least 10 times and the venv was not activating automatically.