When using the integrated powershell terminal with VSCode, colors are taken into consideration from
- The VSCode theme
- The colors set in Powershell itself
I recommend matching both color schemes as closely as possible to make life easier for yourself.
For setting the powershell colors use this application which actually works: https://github.com/lukesampson/concfg I tried other tools like ColorTool already to no avail
Ensure you haven't already overridden any Powershell colors in this file $profile