Thanks for calling this setting to my attention. I wasn’t aware of its existence. The text is:
Julia: Use Plots Pane
Display Plots within VSCode. Might require a restart of the Julia process.
I tried it and it did not work. I even rebooted my PC to make sure I was in a new Julia session. The setting does not seem to have any effect on whether the chart appears in the Plots Pane. There must be something blocking VSCode from doing that.