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Anything in the security event log hunting at what may have happened?

Did you test with Shares on different servers/storage? Im assuming so but figured I would ask so you could see if its isolated to one or if its all.

Thanks, seems to apply to all shares, even shares everyone full control.

I typically blame FSLogix/App Layering/Antivirus for odd errors like this. Since you use FSLogix, what happens if you uninstall FSLogix on the test server? If it still fails uninstall the Antivirus and test again.

If you remove the FSLogix rules, also make sure to remove the compiled rules in the “CompiledRules” folder

I have seen some odd behavior between FSLogix and 3rd party encryption software around file deletion operations. Does the same behavior occurs with admins rights ?

If on server 2019 then the folder issue is likely this https://support.citrix.com/article/CTX263595 - Had to set the DontUseDesktopChangeRouter value to resolve it on a 1912 farm.