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The error message "Visual Studio Code: Illegal characters in path" typically means that one or more of the characters being used in the path to create the new project contain characters that are not allowed in file paths, such as special characters or spaces. This can often occur if the project name or path includes special characters or spaces. To resolve the issue, try renaming the project or folder path to one that only includes letters, numbers, and underscores, and does not contain any spaces or special characters.