Visual Studio code is not able to open files or folder within hidden folders. If I go to the file within the hidden folder .sfdx and try opening the file sfdx-config.json then Vs code opens with below error {"name":"sfdx","hostname":"blr-ffefe","pid":21322,"log":"Login","level":50,"msg":"[\n 'ERROR running auth:web:login: ',\n "EACCES: permission denied, open '/Users/usernname/.sfdx/sfdx-config.json'"\n]","time":"2022-04-07T08:58:22.413Z","v":0}
I have also removed all the files.exclude , this is happening in Mac OS Monterey.
Steps to reproduce : Mac OS Monterey
navigate the hidden folder right click on any file within the hidden folder and select open with Visual Studio Code
Looks like you can solve this problem by creating a hidden folder (with .) and a hidden file using the VS Code itself. By using file -> Open -> create any hidden folder/file in the open window.