Does anyone know, is it a bug or something wrong with my VS Code installation that causes two entries for New File in VS Code File drop-down menu?
Not a bug. They do different things.
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Yes, most of the options in all of the drop-down menus do different things, and that’s why they have different names. So why do these two options that do different things have the same names?
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You asked if it was a bug or something wrong with your installation. The answer is no.
I cannot speak to why they have those labels. I would say the “…” implies different enough behavior, so I would not consider them as having the same name. But the VS Code devs & maintainers would be the better people to ask about that.
FWIW I always use Ctrl+N to make a new file, which I guess corresponds to the first option.
Interesting interpretation! I read the “…” to mean “This option is still under construction.” I was wondering if perhaps it was a temporary placeholder name that somehow got shipped out by accident. I certainly can’t imagine anyone would intentionally give two options the same name.
Well, New File… displays a dialog before creating a new file where you can select for example Jupyter Notebooks as file type.
The entry New File just creates a new file…
Three dots for a menu entry that displays a Dialog is quite standard…
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Not sure if you’re joking, but you just said New File creates a new file... 
Seems like this is going to be better disambiguated in 1.67:
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