Use Visual Studio Code for Salesforce Development cannot deploy

I am working through 'Use Visual Studio Code for Salesforce Development'

I've followed all the steps very carefully.

When I come to deploy to the Org (right-mouse-click on Class and choose 'SFDX: Deploy Source to org') I get this error:

Error deploying or retrieving source: The file or directory that you tried to deploy or retrieve isn't in a package directory that's specified in your sfdx-project.json file. Add this location to your "packageDirectories" value, or deploy or retrieve a different file or directory. For details about sfdx-project.json, see: https://developer.salesforce.com/docs/atlas.en-us.sfdx_dev.meta/sfdx_dev/sfdx_dev_ws_config.htm

The SOQl test runs fine, so the connection looks good...