Hi,
I was about to suggest that you may be encountering this issue, but then noticed you said you are running .NET 4.8. This was an example of a similar problem, but they were not on .NET 4.8 (perhaps they may be a clue in that thread anyway).
Are you running Octopus Cloud or self-hosted? And if self-hosted, which version?
The best work-around I can suggest in the mean-time is to redirect errors when invoking terraform.exe, and use it’s return code to decide whether to fail the step.