When you right-click on a folder in Dolphin and mouse over to "Open With", what does it show?

It shows:
Gwenview
Visual Studio Code

Thanks. So when you left-click on a folder in Dolphin, it opens in VSCode?

No. If i select "View Timeshift logs" in Timeshift, it opens the folder in VS Code. In System settings i have set the folders to open in Dolphin by default.

So the bug only happens when you open a folder from the Timeshift app? Not any other apps?

No. "Open Directory" from about:support in Firefox also opens in VS Code.
For comparison when i download a file in Firefox and select "Open containing folder" it opens Dolphin.

There might be some useful info in the VS Code report above.

Please attach the following files:

~/.config/mimeapps.list

/usr/share/applications/mimeapps.list

/usr/share/applications/kde-mimeapps.list

/usr/share/applications/gnome-mimeapps.list

I do not have:
/usr/share/applications/mimeapps.list
/usr/share/applications/kde-mimeapps.list
/usr/share/applications/gnome-mimeapps.list

I am uploading:
~/.config/mimeapps.list
/usr/share/applications/mimeinfo.cache

Created attachment 139154 [details]
~/.config/mimeapps.list

Created attachment 139155 [details]
/usr/share/applications/mimeinfo.cache

Okay, so the problem has become obvious. Your /usr/share/applications/mimeinfo.cache has:

inode/directory=code.desktop;org.kde.dolphin.desktop;org.kde.gwenview.desktop;

Which means that the system thinks VSCode should be the preferred app to open folders.

Your ~/.config/mimeapps.list file lacks any line with "inode/directory=[something]" on it. So the system is falling back to an alphabetical list of all apps capable of opening folders, and VSCode's .desktop file randomly happens to have a reverse-DNS-style identifier that is alphabetically first. If that wasn't the case, Dolphin would be used instead and no one would be the wiser. :)

By contrast, my ~/.config/mimeapps.list file has this in it, in the [Default Applications] group:

inode/directory=org.kde.dolphin.desktop;

Can you send screenshot of how the "Default Applications" page in System Settings looks for you?

Created attachment 139230 [details]
Default apps

Created attachment 139274 [details]
inode/directory settings

I've also got this.

Created attachment 139275 [details]
image/jpeg settings

I also have a related issue. I've downloaded an "image/jpeg" to the Desktop. If i open it from the list of downloads in Firefox (the down arrow near the address bar) it opens in Google Chrome, not in Gwenview. If i open it from the desktop icon it opens in Gwenview.

Can you do me a favor and set the default file manager to something else, click apply, and then set it back to Dolphin, and see if that fixes it?

I tried both first changing to Ark and then back to Dolphin (without ticking "Remember application association for types inode/directory"), and also changing to Ark and back to Dolphin (with ticking "Remember application association for types inode/directory" on each change) - it didn't work. I haven't logged out and in though.

Welp, I'm confused.

Since then I've completely clean reinstalled and moved to Arch, respectively newer versions of KDE software.
It is interesting that now i have an HTML file on my Desktop, which when i open by double-clicking first opens the Konqueror browser but does not load in it, instead after Konqueror is opened then Firefox opens side-to-side and the file is shown in Firefox. Right clicking on the file properties says "Open with: Konqueror". But in System Settings -> Default applications it shows "Web browser: Firefox".

Operating System: Arch Linux
KDE Plasma Version: 5.23.4
KDE Frameworks Version: 5.89.0
Qt Version: 5.15.2
Kernel Version: 5.15.10-zen1-1-zen (64-bit)
Graphics Platform: Wayland
Processors: 8 × Intel® Core™ i5-8250U CPU @ 1.60GHz
Memory: 7,6 GiB of RAM
Graphics Processor: Mesa Intel® UHD Graphics 620