Just want to report this for anyone running into the same problem. I already resolved it.
I used Toolchain Manager version 2.1.0 to install everything on my M1 Mac. When I load an application into VS Code I get the warning saying I have the wrong version of C/C++ extension installed. To fix the problem I first uninstalled the C/C++ extension, then I used the CLI to delete the extension folder:
~/.vscode/extensions/ms-vscode.*
Then restart VS code and reinstall the C/C++ extensions.