@SCCM SQL
Thank you for posting in Microsoft Q&A forum.
First, do you have appropriate AV exclusions in place or have you tried simply disabling your AV and testing again?
And you may need to check the distmgr.log for the offending directory and delete it like below thread described:
https://www.windows-noob.com/forums/topic/15495-distribution-manager-failed-to-access-the-source-directory/
If the response is helpful, please click "Accept Answer" and upvote it.
Note: Please follow the steps in our documentation to enable e-mail notifications if you want to receive the related email notification for this thread.