The Angular Material Components Repo has a big build system, which was never properly prepared to run on native Windows. That's the reason you hit a snag with the SASS toolchain complaining.

The fastest way to get up and running is by installing WSL2 with the latest Ubuntu, installing the newest node via nvm deleting the node_modules folder installed by pnpm in the native windows environment, performing https://stackoverflow.com/a/58414196/6240779, letting pnpm install install the required packages and finally starting the local dev server. So you keep the code in outside of WSL, but let WSL run the dev server.

Be patient with pnpm dev-app, it's a heavy weight.