I have reproduced the issue at my environment using .Net 7 isolated process with service Bus triggered function and got the expected result
The attribute 'ServiceBusTrigger' is a WebJobs attribute and not supported in the .NET Worker (isolated process)
Please check if you have below items in your .csproj file.
You can refer to this SO Thread for more details about the error.
<ItemGroup>
<PackageReference Include="Microsoft.Azure.Functions.Worker" Version="1.10.0" />
<PackageReference Include="Microsoft.Azure.Functions.Worker.Extensions.ServiceBus" Version="4.2.1" />
<PackageReference Include="Microsoft.Azure.Functions.Worker.Sdk" Version="1.7.0" />
</ItemGroup>
I have created a default service Bus queue triggered function using VS code.
I have below files created in vs code

Code:
using System;
using Microsoft.Azure.Functions.Worker;
using Microsoft.Extensions.Logging;
namespace Company.Function
{
public class ServiceBusQueueTrigger1
{
private readonly ILogger _logger;
public ServiceBusQueueTrigger1(ILoggerFactory loggerFactory)
{
_logger = loggerFactory.CreateLogger<ServiceBusQueueTrigger1>();
}
[Function("ServiceBusQueueTrigger1")]
public void Run([ServiceBusTrigger("myqueue", Connection = "afreen001_SERVICEBUS")] string myQueueItem)
{
_logger.LogInformation($"C# ServiceBus queue trigger function processed message: {myQueueItem}");
}
}
}
local.settings.json:
{
"IsEncrypted": false,
"Values": {
"AzureWebJobsStorage": "UseDevelopmentStorage=true",
"FUNCTIONS_WORKER_RUNTIME": "dotnet-isolated",
"afreen001_SERVICEBUS": "*****************"
}
}
Output:
