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Microsoft Response: Thanks for taking the time to report this - the team has investigated your issue, and included a fix for it with Dev Channel Build 25267
Jennifer G - Microsoft engineer
Thank you for mentioning this. Been struggling for months with this issue ever since I upgraded to Windows 11 and my Onedrive doesn't sync Desktop... Hopefully this will get fixed soon!
I have the issue solved but it will require you fresh install. This is what I done. I downloaded the Windows Media Creation tool and let it create a new installation application of windows on a USB stick. This installation installed Edition Windows 11 Pro, Version 22H2, installed on 2/26/2023, OS build 22621.1344, Experience Windows Feature Experience Pack 1000.22639.1000.0.
The previous 22H2 installation must have been a different build. The problem is solved, and I can open up any application I have that required selecting a folder anywhere in windows. They should be done with the development portion.