prj.conf is "Not present on disk"

HI all!

So I'm trying to use and modify parts of the Asset Tracker v2 application for my own project and when I created a new application with the pre-existing sample on nRF Connect for VS Code, I created a new build config and in my KConfig files it states that the file prj.conf is not on my disk? I'm not really sure how to proceed with that since it doesn't pop up as an error in VS Code but the file is labeled in red when I look through the build files as shown in an inserted image.

I tried to "clean build configuration" and in my terminal I got an error saying ":The terminal process failed to launch (exit code: 1)."

I have both v2.6.1 as my toolchain and SDK and I am at a loss of how to fix this issue? 

Thanks!

Rachel

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