I’m not sure what the issue is here, based on present info. I can say that users are successfully using bud with WSL2, and this is likely not a problem with bud but most likely a dev server configuration issue.
I’d think the next step is to make sure that your server is issuing a normal response (code 200). Others have reported similar issues and it has been the result of the server issuing a redirection or failure status. bud is not set up to follow proxy redirections, by default.
Under the network panel in devtools, what are the response headers being issued by the server? That’s the next thing I would check.