Already answered via comments, but moving it to an answer (especially since it was what I was going to post before I even read the comments).
Windows Terminal (and many other Store apps) create App Execution Aliases, which are essentially "fake .exe files to launch the Store app. These .exe's are created in the user's %LOCALAPPDATA%\Microsoft\WindowsApps folder (a.k.a. %USERPROFILE%\AppData\Local\Microsoft\WindowsApps), which should automatically be in the default path.
However, I've seen cases of this folder being accidentally removed from the Path before, and I suspect (confirmed in the comments) that this is the case here, since you mention that you even tried toggling the app execution alias without improvement.
Check the Path user variable (not the System variable). The easiest access, IMHO, is by:
- Searching for *Path" in the Start menu
- Select Edit the system environment variables
- Click the Environment Variables button
- Edit the Path variable in the User variables for ... section, not the System variables one.
If %USERPROFILE%\AppData\Local\Microsoft\WindowsApps or %LOCALAPPDATA%\Microsoft\WindowsApps is missing, add it back in (the first form is the "normal" default).
Side-note: Even if there isn't an app execution alias for a Store app, you can often create a PowerShell script that will execute it. You can then place this script in a directory in your path (I use %USERPROFILE%\.local\bin to mimic Linux, which I've added to my path). There is typically a "package family name" that isn't tied to a particular version number that can be used.
See my answer here (or some of the other answers on that question) for details on finding the correct command-line.
