You are using a Windows machine with the MSVC compiler, so you need to start VS Code from the Developer Command Prompt for VS for all environment variables to be set correctly. To relaunch using the Developer Command Prompt for VS:
Open the Developer Command Prompt for VS by typing "developer" in the Windows Start menu. Select the Developer Command Prompt for VS, which will automatically navigate to your current open folder.
Type "code" into the command prompt and hit enter. This should relaunch VS Code and take you back to this walkthrough.