I had the exact same issue when I added push extension capability to my project as described in https://capacitorjs.com/docs/guides/push-notifications-firebase#prerequisites. But after adding the extension, I encountered this issue when I tried to run 'pod update'.
Daniel Pitts solution above was exactly right. Problem went away in a second. All I did was, right click on the pushextension target and select Location as "Relative to Group".
