Any help with this error would be appreciated. Not sure where to add this directory.

Did you make sure you are on the right version of nodejs? I use nvm to switch back and forth, but these types of errors often happen when I am not on the right version or I just attempted to initialize the tools with the wrong version. In the absence of other solutions I would probably go to a completely fresh version of the extension/theme tools and pull the extension/theme down again. Then if you have code difference merge those.

If you're using an m1 mac, node 12.21.0 has problems. I have to use v14 to run the 2022 extension tools. For some reason the node package for m1's has a bug.

Thank you @Chris & @Marvin. It was in fact a version issue.