Jupyter Lab Python Kernel Not Found in Code

Hello curious if anyone has had a similar issue. When I am trying to create a jupyter notebook within code (code oss from microsoft) it is not able to detect any python kernels. I did try with the interpreter set as both the system python installation and using a conda environment.

I am however able to run jupyter-lab directly from the terminal and it detects the kernels just fine both the system python install and the conda environment install. For some reason it just doesn't detect any kernels within code. From code I am able to write regular python files and have everything work as intended again with both the default python install and with conda it is only an issue that I face when trying to create a jupyter notebook in code.

Has anyone faced a similar issue, or have any tips and tricks to try?

Thank you in advance.