Hi everyone.
I'm getting this too.
Windows Restore shouldn't be looking at that folder in the first place, as system restore is supposed to ignore user document folders (and this is a cloud drive that is backed up online).
As far as I can figure, the accidental inclusion of this special folder makes the automatic restoration impossible.
If the reason you are trying to restore is to get some specific overwritten files out of the restore point, you can use System Restore Explorer described here (works great on Windows 10:
https://www.howtogeek.com/76212/how-to-mount-a-system-restore-point-to-restore-a-single-file/
While you are in there, you will notice that the OneDrive folder is, in fact, being monitored. In theory, you can add "c:/Onedrive" to the ignored list for future restore points, which should make Windows restore work properly from today (on new restore
points) but does not make old restore points usable.
https://tweaks.com/windows/37472/exclude-specific-folders-from-system-restore-backup/
Also..in theory, if one could modify the shadow copy (the Explorer wisely mounts them read-only) to remove the offending folder, it shouldn't try to replace it when you do the restore. Of course, I would make several copies of my Onedrive Data first if I
was able to do so.