This issue still persists for me (currently on Obsidian for Windows v1.7.4). Related to Code Block Remains Visible in Folded Headings and Folding applied on code block lines starting with "#" which were said to be fixed in 1.7.0.
The 1.7.0 changelog said: * Fixed issue where using the "Fold all" command on a long Markdown file incorrectly folded lines inside code blocks.. But it seems that the fix wasn’t working for this issue at least.
I think code blocks should be considered one unit which shouldn’t be fold in half by the actual heading fold.