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I can tell you that we're excluding those folders from scenario 2 in CPM based on a number of issues that we saw, per Microsoft Support's direction.

the mad thing is you used to have to roam some of those folders such as tokenbroker/Microsoft.AAD.BrokerPlugin_cw5n1h2txyewy to get it to work now they tell you to exlcude them and dont roam them !!! We had success roaming the below folder which fixed our constant 365 sign in prompts (No hyrid or Azure ad join and windows 2016 so uses ADAL) https://support.citrix.com/article/CTX489573/office-365-account-error-sorry-we-cant-get-to-your-account-right-now

Yeah, best practices regarding licensing on a virtual or shared licensing environment changes all the time it seems..

So to add these folders as a exclusion Do you guys add them in the Redirection.xml file or using something else? We are not using Citrix. VMware with FSLogix and DEM.

redirection.xml yes

I see this to be added as a exclusion. Is that mean all the packages folders or only that sub folder? I don't see any subfolders under AC except under Microsoft.AAD.BrokerPlugin_cw5n1h2txyewy (which they are saying to be excluded entirely).

The latest version of FSLogix handles these folder natively. You may need to try the RoamIdentity setting, but should only be used as a workaround when SSO isn't fully configured. Also, don't use RoamIdentity if you are using Intune.