Try which zsh to confirm the path of your zsh executable. You might be having path error.

Or Try the GUI way.
- Open Command Palette
Windows – Ctrl + Shift + P
Mac – ⌘ + Shift + P
- Search For
Terminal: Select Default Shelland select it.

- See the list of available shells and select one. If you cannot see zsh here, then you might have some configuration issues with zsh.

It also likely that the zsh installation/configuration error caused your entry in settings.json file to be invalid. Once you have selected the shell, hit ctrl + ~ or ⌘ + J to open the terminal window and see the results. If you already opened a terminal then you would have to trash it or open another one.
You could also open your settings.json and see or add the following entry directly.
// Edit July 2021 - New Updated Snippet
"terminal.integrated.defaultProfile.osx": "zsh"
// Now deprecated
"terminal.integrated.shell.osx": "/bin/zsh"