I recently set up a addon for Visual Studio Code, for editing Markdown files in HUGO. The addon was from Elio Struyf called FrontMatter.
I got it working quickly enough. Although I had problems with the media paths not showing correctly in the media browser. The reason for this was, I’d used the default setting (as mentioned in the documentation) which assumes media will be in the root static folder, where as I had media in an assets folder under the content folder.
This caused the links to be shown as /content/assets/image.png and not simply /assets/image.png as expected.
In any case the solution was to edit the Front Matter settings and set the key:
frontMatter/content.publicFolder to "content"
This then presented the correct path in the media viewer section of the addon, button for copy and pasting into the post.
More information is available on Elio’s documentation page: puplicFolder, I really recommend taking sometime to read it through, as it is very helpful, at least is was for me.