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Language Server initialization failed

See original GitHub issue

When I open a python project, the python output console shows the language server failing to initialise.

The logs show vscode libraries being loaded from a Google Drive folder, which is managed by https://github.com/lra/mackup

Environment data

VS Code version: Version 1.25.1 (1.25.1)
Extension version (available under the Extensions sidebar): 2018.7.0
OS and version: OSX 10.13.6
Python version (& distribution if applicable, e.g. Anaconda): 2.7 and 3.6 (different projects)
Type of virtual environment used (N/A | venv | virtualenv | conda | …): pyenv-virtualenv + pipenv

Actual behavior

Language server fails to start.

Expected behavior

Language server starts.

Steps to reproduce:

Open a python project

Logs

Output for Python in the Output panel (View→Output, change the drop-down the upper-right of the Output panel to Python)

Starting Microsoft Python language server.
[Info  - 14:22:55] Created Microsoft.PythonTools.Interpreter.Ast.AstPythonInterpreter instance from Microsoft.PythonTools.Interpreter.Ast.AstPythonInterpreterFactory
[Error - 14:22:56] Server initialization failed.
  Message: Object reference not set to an instance of an object.
  Code: -32000 
[object Object]

Output from Console under the Developer Tools panel (toggle Developer Tools on under Help)

log.ts:171   ERR Object reference not set to an instance of an object.: Error: Object reference not set to an instance of an object.
    at new ResponseError (/Users/josh/Google Drive/Mackup/.vscode/extensions/ms-python.python-2018.7.0/node_modules/vscode-jsonrpc/lib/messages.js:46:28)
    at handleResponse (/Users/josh/Google Drive/Mackup/.vscode/extensions/ms-python.python-2018.7.0/node_modules/vscode-jsonrpc/lib/main.js:430:48)
    at processMessageQueue (/Users/josh/Google Drive/Mackup/.vscode/extensions/ms-python.python-2018.7.0/node_modules/vscode-jsonrpc/lib/main.js:258:17)
    at Immediate.<anonymous> (/Users/josh/Google Drive/Mackup/.vscode/extensions/ms-python.python-2018.7.0/node_modules/vscode-jsonrpc/lib/main.js:242:13)
    at runCallback (timers.js:672:20)
    at tryOnImmediate (timers.js:645:5)
    at processImmediate [as _immediateCallback] (timers.js:617:5)