If you are Unable to drag and drop files from Explorer to VSCode, then these steps might be able to help you:

Firstly, the default version on vscode downloads site is a “User Installer” Version:

For some reason, if we run this version as Administrator, then it can cause problems like limiting drag and drop functionality.

So, if you need to continue using this version make sure that “Run as Administrator” is not checked in your Compatibility settings:

But if you need to run it as an Admin, then make sure that you get the “System Installer” from their downloads site:

https://code.visualstudio.com/

Go to Other Downloads. This will open up all Downloads. Here select the System Installer:

Now you should be able to run it as an Admin, and have the drag and drop functionality as well.

User Installer and System Installer:

User setup for Windows
Installing the user setup does not require Administrator privileges as the location will be under your user Local AppData (LOCALAPPDATA) folder. User setup also provides a smoother background update experience.

Use System Installer if you need to run it for all users. Or if you need vscode to have Admin access.

Reference: https://code.visualstudio.com/updates/v1_26#_user-setup-for-windows

“This User Installer is not meant to be run as an Administrator. If you would like to install VS Code for all users in this system, download the System Installer instead…”