diff --git a/sqlmesh/core/config/loader.py b/sqlmesh/core/config/loader.py
index 5485b0f623..7f1789a677 100644
--- a/sqlmesh/core/config/loader.py
+++ b/sqlmesh/core/config/loader.py
@@ -194,7 +194,8 @@ def load_config_from_python_module(
 
     if config_obj is None or not isinstance(config_obj, Config):
         raise ConfigError(
-            f"Config needs to be a valid object of type sqlmesh.core.config.Config. Found `{config_obj}` instead at '{module_path}'."
+            f"Config needs to be a valid object of type sqlmesh.core.config.Config. Found `{config_obj}` instead at '{module_path}'.",
+            module_path,
         )
 
     return (
diff --git a/vscode/extension/tests/broken_project.spec.ts b/vscode/extension/tests/broken_project.spec.ts
index 605a622787..f2af3e13e0 100644
--- a/vscode/extension/tests/broken_project.spec.ts
+++ b/vscode/extension/tests/broken_project.spec.ts
@@ -358,4 +358,46 @@ test.describe('Bad config.py/config.yaml file issues', () => {
       .first()
       .isVisible({ timeout: 5_000 })
   })
+
+  test('sushi example, correct python, bad config', async ({
+    page,
+    sharedCodeServer,
+  }) => {
+    const tempDir = await fs.mkdtemp(
+      path.join(os.tmpdir(), 'vscode-test-tcloud-'),
+    )
+    await fs.copy(SUSHI_SOURCE_PATH, tempDir)
+    await createPythonInterpreterSettingsSpecifier(tempDir)
+
+    const configPyPath = path.join(tempDir, 'config.py')
+    // Write an invalid Python to config.py
+    await fs.writeFile(configPyPath, 'config = {}')
+
+    await page.goto(
+      `http://127.0.1:${sharedCodeServer.codeServerPort}/?folder=${tempDir}`,
+    )
+    await page.waitForLoadState('networkidle')
+
+    // Open customers.sql model
+    await page
+      .getByRole('treeitem', { name: 'models', exact: true })
+      .locator('a')
+      .click()
+    await page
+      .getByRole('treeitem', { name: 'customers.sql', exact: true })
+      .locator('a')
+      .click()
+
+    // Expect the error to appear
+    await page.waitForSelector('text=Error creating context')
+
+    // Open the problems view
+    await runCommand(page, 'View: Focus Problems')
+
+    // Assert that the error is present in the problems view
+    await page
+      .getByText('Config needs to be a valid object of type')
+      .first()
+      .isVisible({ timeout: 5_000 })
+  })
 })