It's not a fix, only for some.
I specifically opened OneDrive, signed in, disabled "Files on demand", tried backup again and still the same bloody error.
To summarise my lucky successful workaround:
01: I am home user, no network except laptops internet over pass-thru cat 6 cabled powerlines.
02: Onedrive was and is disabled in Startup. (Its presence always irritated me as I never intended to use it) though OneDrive is registered to my Office2016 account.
03: So Onedrive was never running when the problem originally occurred.
04: In my unknowledgeable quest for the option "Files on demand", viz.
OneDrive > Account > Choose Folders > I additionally untick'd everything here.
05: I eventually found the option "Files on demand" which I also unticked.
06: Your continuing problem made me nervous, so I retested to both USB3 Portables today.
07: Both worked, the 2nd after a W7 Backup change settings.
"Files on demand" remains unticked.
08: I just turned "Files on demand" back on again, retested on the 2nd portable and it worked.09: I loaded OneDrive App - says "OneDrive is up to date and all files are in sync."
10: I left Onedrive running with "Files on demand" ticked;
Retested on the 2nd portable again and it worked! So I give up.
I am sorry this didn't work for you.
If I can help by confirming any other settings, variables or whatever, just ask.
I am retired so time not an issue for me.
Best regards..