Hi kind03,
Welcome to post in Microsoft Community.
I'm Mosken, I do apologize for the inconvenience that you're experiencing right now, let me help you figure it out.
According to your description, I knew that your File history cannot back up a specific directory, even if that directory is on the drive you've chosen to back up. If my understanding is wrong, please correct me in the reply.
First of all,
<FolderExclude Hidden="true">D:\Users\hxq\Documents</FolderExclude>
means that the D:\Users\hxq\Documents directory will be excluded from the backup directory, that is, it will not be backed up.
You can cancel these settings in File history, visit How to Perform a Backup Using File History in Windows 11 or Windows 10(microsoft.com) to see the specific method.
The above steps are provided based on the information I have learned so far, I wish that will be helpful to you. If your problem still cannot be solved by these steps, you could tell me the specific situation in the next reply. I will continue to assist you in solving the problem.
Best Regards,
Mosken- MSFT | Microsoft Community Support Specialist