This is by design, since folder monitoring requires Defender’s on-access (real-time) protection. So you can’t enable Controlled folder access when you have a third-party AV app installed and Windows Defender is running in its Limited Periodic Scanning (on-demand) mode. This new feature is only available when Windows Defender’s is running in a standalone configuration, and its real-time protection is turned on, as indicated in the Requirements section of this documentation:
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