NCS 1.8 VS Code #Include Errors

Today I opened VS Code to find all my Zephyr/NRF #includes have the red squiggly lines with an error such as "cannot open source file zephyr/types.h". Right click -> Go to Definition also does not work for these includes. The same thing happens in all my projects. Build and Pristine Build work fine to build the program but do not resolve this problem. I suspect there was a VS Code or extension related update that broke the Intellisense? Any help is appreciated.

Potentially related, sometimes projects randomly will not build with the error seen below. Reopening VS Code fixes this.

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