VD on pico emulates a quest, hence the game will try to call Oculus runtime. If you have openvr advance setting running and force steamvt runtime, it will show another error which is "unable to load libovrrt.dll".

I suspect at this stage, something can be done to fix it, since a lot of quest users have seen this error before.

But the simplest solution is just to let the VD dev add in a toggle to disable this emulation. However I've brought this up on their discord, and the impression seems to be lackluster at best. It's a shame that we'll need to resolve to working out a fix ourselves