The AVD GUI does NOT allow the selection of Play Images for some reason anymore!

Since you cannot select the Play store image anymore you need to edit some files
NOTE: This may also work in Visual Studio (not tested - some feedback will be apreciated!)
Create a device with the correct API and Hardware profile and Finish

Before you start this new AVD you need to Edit the files as follow

Edit config.ini (I use VIM but any editor will work) Edit the following lines in the file
PlayStore.enabled=true
avd.ini.displayname=Pixel 4 XL API 32 Play
image.sysdir.1=system-images\android-32\google_apis_playstore\x86_64\
tag.display=Google Play
tag.id=google_apis_playstore
In the latest Android Studio (Electric Eel), you need to launch SDK Manager, and under SDK Platforms check the "Show Package Details" box. Then select the Google Play images: