You likely need to enable the feature-flag for this feature. In the functions.json file in your repository you need to set (or add) the enableExternalSystems key to true.
If you have already done that and are still seeing this issue, I would recommend trying to restart Code Assist.
After I set (or add) the enableExternalSystems key to true .
I had to restart Workspace. Then I got this
The @Query annotation was used on method. This is a experimental feature that needs to be enabled before use. Please enable it by setting the ‘enableQueries’ config to ‘true’ in the ‘functions.json’ file. Refer to the documentation for more details.
After enabling Queries, it works fine. Thanks for the quick response.