Customscript Extension deployed with Terraform shows “Invalid manifest version”

I have deployed a Customscript Extension to a Windows VM (to add a second Log Analytics Workspace) but the Terraform deployment times out.

When I check the Extensions in the Azure Portal it shows the following:

Azure Portal Extension Error

The script (powershell) works perfectly if run locally on the VM.

The error (Invalid manifest version: 10 for handler Microsoft.Azure.Extensions.CustomScript:2.0.7 in file 0.status) doesn’t appear to give much information as to why it’s failing.

Terraform code:

resource "azurerm_virtual_machine_extension" "MMA_Cust" {
  for_each              = toset(var.vm_hostname_list)
  name                 = "MSMonitoringAgent_Cust"
  virtual_machine_id   = azurerm_virtual_machine.gwb-vm[each.key].id
  publisher            = "Microsoft.Azure.Extensions"
  type                 = "CustomScript"
  type_handler_version = "2.0"
  depends_on           = [azurerm_virtual_machine_extension.MMA]

  settings = <<SETTINGS
        "script": "${base64encode(templatefile("${path.module}/add_2nd_LAW.ps1", {