This error was frustrating. After a bunch of trial and error following other people’s approaches (resintalling, admin rights, wsl settings etc), I checked the docker log files located in [appdata]\local\docker, it referred to an error “Unsupported console settings. In order to use this feature, the legacy console must be disabled…”
After opening a command prompt (cmd.exe) Right click on the top bar Select Properties Uncheck “Use legacy console” Then restart Docker Desktop.
This fixed the issue for me. Hope it works for you too.