Fix settings conflict when opening files locally

Fixes https://github.com/microsoft/vscode-remote-release/issues/980

src/vs/workbench/services/dialogs/electron-browser/fileDialogService.ts

@@ -46,8 +46,8 @@ export class FileDialogService extends AbstractFileDialogService implements IFil
 
 	private shouldUseSimplified(schema: string): { useSimplified: boolean, isSetting: boolean } {
 		const setting = (this.configurationService.getValue('files.simpleDialog.enable') === true);
-
-		return { useSimplified: (schema !== Schemas.file) || setting, isSetting: (schema === Schemas.file) && setting };
+		const newWindowSetting = (this.configurationService.getValue('window.openFilesInNewWindow') === 'on');
+		return { useSimplified: (schema !== Schemas.file) || setting, isSetting: newWindowSetting };
 	}
 
 	async pickFileFolderAndOpen(options: IPickAndOpenOptions): Promise<any> {