It seems you are facing the same issue as https://github.com/Microsoft/vscode-remote-release/issues/7704. The command (via Command Palette) does work, but not the shortcut.

Based on one of the comments provided, Without WSL, the focus needs to be in the explorer, but with WSL the focus needs to be in the editor. This is a bit confusing.

The issue is still open in VS Code, so the error still occurs. In the meantime, you may upvote the issue, to improve the visibility to the team, and choose a different shortcut.