An update in 2 parts:

1. Some of the code in our repo is non-canonical ObjectScript (eg it has examples of '//ABC' comments, with no space, in the files in the repo; these are canonicalised to '// ABC'). So when imported into Ensemble via the VS Code extensions, it is "canonicalised" and subsequently shows as changed in relation to what was in the repo. This is our problem, not a bug, but we've no idea why it occurred in the first place!
2. In the course of investigating it we stumbled on the ObjectScript Language Server error above, and I've subsequently been able to isolate it at least to the point of making it reproducible. There is further discussion on the GitHub discussion forum, including instructions for how to reproduce.

As result I'm going to mark this as answered, because further exploration will be done from stuff on the GitHub forum.