It took me a while last year with lots of trial and error to figure out the combination that worked for me. I can’t remember why I’m using FlexASIO instead of VM as my Dorico output other than this combination worked without distortion. Dorico can see VM though, so you might want to give it another shot if you can’t get it to recognize your VSC.
I liked the ManyCam/OBS solution for teaching simply because I never have to use “share sound” in Zoom. I can play Dorico, play on my MIDI keyboard, play audio, YouTube clips, talk through my mic, etc. and everything is included in the Zoom audio feed.