[EASIER] via Anaconda Navigator:

a) If you have Anaconda enviorment already setup. Open Anaconda Navigator --> Home --> Launch VS Code

This must get all python and conda path correctly configured for VS Code editor.

b) To verify the settings  Go to Command Palette --> Preferences: Open User Settings--> Extensions--> Python

c) then search for Python: default interpreter Path  and Conda Path

All settings will automatically be sorted :)