With a downloaded and installed version of Visual Studio Code 1.2.1, and a 64bit version of node.exe msi placed in my working directory (I am assuming that is correct), how
Quick fix that works for me. Navigate to the root directory of your folder from command line (cmd). then once you are on your root directory, type:
code .
Then, press enter. Note the ".", don't forget it. Now try to debug and see if you get the same error.