Maybe the problem with IIS has to do with Web Socket support.
See for example from the Docs here:
This extension uses WebSockets to communicate with the InterSystems server during debugging. If you are experiencing issues when trying to start a debugging session, check that the InterSystems server’s web server allows WebSocket connections.
For example from the Windows Features -
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See also IIS Docs.
If this is not the issue let us know if you are getting any error on the VS Code side and/or if you can turn on some logging on the Web Gateway or Server side.
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