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1. Go to Windows Settings > Display > Graphics Settings (way at the bottom)
2. Under "Graphics performance preference" > "Choose an app to set preference" > "Desktop app"
3. Click "Browse"
4. Open your Steam Apps folder (usually it is == C:\Program Files (x86)\Steam\steamapps\common )
5. Then open SteamVR > bin > win64
6. Select vrdashboard.exe and click "Add" (or just open it)
7. Select "Options" and set it to "Power saving", click save.
If its necessary, restart your Steam or PC.
P. S. Just created a reddit account for this answer. I have never seen this solution to the problem anywhere. The same method has helped me and many others with a similar problem in the Oculus environment, but I haven't seen it tried with SteamVR. Hope this helps someone
So you're saying change the vrdashboard.exe to Power Saving allows the desktop to show in VR Dashboard while still being able to play VR games without any errors?
I thought I tried that 3 years ago (as mentioned in paragraph 3 of my original post) but I could look into it again.
What VR headset are you using?