Volar causes errors on all *.vue files when you have a vite project in subdirectory inside another TypeScript project

[segevfiner]

Volar with the TypeScript Vue Plugin, seems to be causing the following error repeatedly on all *.vue files:

Error

[{
	"resource": "/Users/segevfiner/junk/volar-nested-project-bug/tsconfig.json",
	"owner": "typescript",
	"severity": 8,
	"message": "File '/Users/segevfiner/junk/volar-nested-project-bug/web/src/App.vue' is not under 'rootDir' '/Users/segevfiner/junk/volar-nested-project-bug/src'. 'rootDir' is expected to contain all source files.\n  The file is in the program because:\n    Root file specified for compilation",
	"source": "ts",
	"startLineNumber": 1,
	"startColumn": 1,
	"endLineNumber": 1,
	"endColumn": 2
}]

In a project that has a root project with a tsconfig.json and a subproject with a Vite app created with npm create vue@3.

Steps to reproduce:

1. git clone https://github.com/segevfiner/volar-nested-project-bug && code volar-nested-project-bug.
2. Open src/hello.ts.
3. The problems view will be filled with errors like described.

It seems like Volar is trying to forcibly apply the root tsconfig.json in the project to the *.vue files instead of using the one in the subdirectory.

Versions:
VS Code 1.67.0
macOS 12.3.1
Volar & TypeScript Vue Plugin v0.34.11
TypeScript 4.6.4
Node 16.15.0