Environment:

• VSCode Version: 1.71.0-insider (user setup)
• Local OS Version: Windows 11
• Remote OS Version: Ubuntu (though any will work)
• Remote Extension/Connection Type: Containers

Steps to Reproduce:

1. Create a new folder and open in VS Code
2. Add Dev Container configuration files (choosing Ubuntu)
3. Create /.devcontainer/devcontainer.env file:

TEST_VAR=/mnt/c/LocalFolder

4. Add the following to the devcontainer.json file:

"runArgs": ["--env-file",".devcontainer/devcontainer.env"],
"mounts": [
	"source=${containerEnv:TEST_VAR},target=/remotefolder,type=bind,consistency=cached"
]

5. Rebuild and Open in Container
6. Observe Error
   docker: Error response from daemon: invalid mount config for type "bind": invalid mount path: '${containerEnv:TEST_VAR}' mount path must be absolute.

May be related to this issue.