VS Code cursor appear as a block and without typical editing abilities

After some configuration, my cursor in VS Code started appearing as a block. In that state, I'm not able to backspace or edit any of the code. In a saved file with code already written, I can hit the "I" key, and it changes the cursor back to the standard bar with editing capabilities.

When I start a new file, I cannot seem to get out of the bar state.

I ended up following the advice from V-R. I disabled all the extensions and then re-activated everything I needed - that did the trick!

Which extensions are enabled and what version of VSCode do you have? There is a setting Editor: Cursor Style which can be block but it only affects the appearance, may not have anything to do with being unable to edit code. There is a read-only mode where (at least in 1.39.1) trying to edit results in Cannot edit in read-only editor tooltip appearing; that is the mode I get into when double-clicking a file listed in STAGED CHANGES in the Source Control pane. I'd recommend to disable all extensions in the Extensions pane, see if the problem goes away and then bisect