I'm glad that worked for you & others. I didn't have to do any of that. Backup & Restore (Win 7) worked for me in 1809 twice - & I've got Files on Demand turned on & all the "choose folders" checked. I rename them for ID purposes (they have to be renamed back for use)...
So I thought maybe you coincidentally had made the backup into a new folder the first time it worked for you. I thought making it into the same folder that held a 1803 backup would confuse the app. So I copied my 1803 (17134.320) backup, renamed the copy to "WindowsImageBackup", & made a 1809 backup into that folder. I was surprised to see it worked. I guess there was indeed something about your OneDrive that required you to do all that.
I opened the previous version of that backup in the Properties of C:, & all my OneDrive folders & files appear to be there. That's surprising because they are supposed to be On-Demand. And I know they aren't being currently read in, because I deleted "New Text Document.txt" from the current OneDrive - yet there it is in the backup. It can be clicked & opened. There's just one word in it.
Edit 11/14/18: OK, they were On-Demand, but I hadn't right-clicked the folders & selected "free up space" which is what makes them online only. After that & making a new image, accessing a "previous version" does this...