Give preference to env variables from Python ext

[DonJayamanne]

Better logging for #11813

[codecov-commenter]

Codecov Report

Merging #11816 (cb43589) into main (0eda1bc) will decrease coverage by 0%.
The diff coverage is 80%.

❗ Current head cb43589 differs from pull request most recent head a0094ab. Consider uploading reports for the commit a0094ab to get more accurate results

@@          Coverage Diff           @@
##            main   #11816   +/-   ##
======================================
- Coverage     62%      62%   -1%     
======================================
  Files        486      486           
  Lines      34588    34587    -1     
  Branches    5615     5614    -1     
======================================
- Hits       21755    21738   -17     
+ Misses     10783    10781    -2     
- Partials    2050     2068   +18     

Impacted Files	Coverage Δ
...ommon/process/environmentActivationService.node.ts	67% <80%> (+<1%)	⬆️
src/kernels/execution/notebookUpdater.ts	88% <0%> (-8%)	⬇️
...otebooks/controllers/controllerPreferredService.ts	79% <0%> (-5%)	⬇️
src/platform/common/cancellation.ts	68% <0%> (-4%)	⬇️
...form/common/process/pythonExecutionFactory.node.ts	76% <0%> (-3%)	⬇️
src/kernels/raw/finder/localKernelFinder.node.ts	86% <0%> (-2%)	⬇️
src/kernels/jupyter/jupyterKernelService.node.ts	72% <0%> (-2%)	⬇️
src/notebooks/debugger/debuggingManagerBase.ts	66% <0%> (-2%)	⬇️
src/notebooks/controllers/kernelRanking/helpers.ts	60% <0%> (-2%)	⬇️
src/platform/common/utils/async.ts	49% <0%> (-2%)	⬇️
... and 10 more