I used to do the same thing and it doesn't work for me anymore, either.

Caveats:

1. I use Code - Insiders so some of my options may look a litte different.
2. I'm all but certain that this is the result of multiple changes (in VS Code), not one change.
3. I haven't yet found the magic combination to re-enable the feature.

Keyboard shortcut changes

Some of the changes are in the keyboard shortcut assignments: ctrl+k, ctrl+s. I'm all but certain that some changes were due to necessary changes in the Copilot Chat interface. I tried to restore shortcuts like ctrl+enter to send to terminal or interactive window, but the changes I made Chat much more difficult, so I reverted the changes.

REPL destinations

I'm not certain of the correct terminology here, so watch out for ambiguities. As far as I can tell, when sending a selected line to an REPL, there are at least two possible destinations, maybe three destinations, or depending how you count destinations, then maybe dozens of destinations. The two main destinations are Terminal and Interative Window.

Terminal

My terminal of choice is cmd, not PS, but I think we can validly describe both as "terminal" and include all other terminal options in your environment. I remember that my "send selected code to" somewhere commands used to go to the REPL of the configured venv. I remember that one day it started sending everything to an Interactive Window. I clearly remember not being able to figure out what changed, but I liked the interactive window more, so I didn't try to switch back. Terminal has gone through a lot of changes--due to Copilot. Some of those changes could have affected the default behavior of "send to terminal."

I have vague memories of many different enhancements to Terminal that give the user many more options. But, I have ignored them because I've been using cmd since MS-DOS 5: "Don't change my cmd! Your PS is BS! And stay off my lawn!" I've been overly resistant to change in this area. Nevertheless, I wonder if some of the enhancements changed the default behavior of "send to REPL", but you can get the feature back if poke around in the 8900 terminal options. (The phrase "dedicated terminal" just popped into my head: maybe that's the way to get what you want. One thing I didn't like about REPL in terminal is that VS Code would send REPL statements and py -m ... commands to the same terminal: if the terminal was in REPL mode, the py -m ... command wouldn't work of course.)

Interactive window

At some point, there were certainly at least two distinct options for Interactive window.

1. I don't remember what they were. (But one of them might have been a Jupyter kernel.)
2. I remember thinking, "I know what option A is, but I don't really understand option B." So, I picked option A.
3. Option B may still exist somewhere, but at some point, the setting to choose between A and B went away and option A is the default. (I am pretty sure this is related to Copilot again. Autocomplete and Copilot features were not always available in the Interactive window, but after option A became the default, autocomplete (Python language server, I think) and Copilot features steadily became more available.
4. The Interactive window is certainly tied to Jupyter and kernels. No kernel, no interactive window. So,... lots of kernels and lots of Jupyter options means lots of Interactive window options and settings???

In total, the many changes to Interactive window had some major effects on my usage:

1. For a couple of months, I never used "send to REPL", whether it was terminal or Interactive window.
2. Recently, I have started using "send file to Interactive window.
3. I have not put much effort into finding the "send selection to REPL", but I certainly have not seen the option or I would have used it again.