That error is the Verse language server dying when UEFN compiles. VS Code then drops highlighting and IntelliSense until you restart the server. Common, not a bad script.
Do this in order:
In VS Code: Command Palette → Verse: Restart Language Server (or Developer: Reload Window).
Close extra VS Code windows. One window on the UEFN project is enough. Two instances fighting over the same .verse digest will crash the LS.
Don’t “Run” the Verse file from VS Code. Compile / Push Changes from UEFN. The LS is not a runtime.
If it still dies on every compile: quit UEFN and VS Code, delete the local Verse cache under your project (Binaries, .vs, and the generated *.digest.verse is fine — it comes back on compile), start UEFN first, then open the project in VS Code.
Update the official Verse extension. An old LS against a new UEFN build is a frequent cause of Connection to server is erroring.
If it only happens on one device: look at the Verse output panel for the line before the shutdown. A parse error in a huge module, or a path with non-ASCII characters, will take the LS down with it. Fix that file and the disconnects stop.