Setting up VSCode env for bpy and pylance

Question

I've read like few books worth google results for the past WEEK but I haven't found a single relevant data. There is plenty of advises how to setup venv/.env/pythonPath but none of them work. Here is what I have so far:

1. Python 3.7 installed alongside main installation of 3.8 (no OS path env modified for 3.7 specifically)
2. Installed bpy wheel package/module
3. Python 3.7 selected as interpreter (offered by VSCode automatically)
4. Set up .env inside the project that targets all possible directories with relevant modules
5. Set up env through terminal according to MS docs

Absolutely none of this matters:

Pylance is unable to see imports properly and having 173 import errors in error log kinda gnaws at me at this point.