OneDrive for Business Known Folder Move fails before setup completes for department pilots: Fix Guide

When rolling out OneDrive for Business Known Folder Move to a department pilot group, you may see the setup start and then fail before it finishes. The error message often says something like We couldn’t move your folders or Something went wrong. This failure stops the pilot from completing and blocks users from backing up their Desktop, Documents, and Pictures folders.

The root cause is almost always a combination of existing folder redirection Group Policy, incorrect tenant sync settings, or stale registry entries left from previous OneDrive configurations. These conflicts prevent Known Folder Move from taking ownership of the folders.

This guide explains exactly why Known Folder Move fails during pilot deployment and provides a step-by-step fix that works for department-level rollouts. You will also learn how to prevent the same failure from happening again when you expand to additional users.

Why Known Folder Move Fails Before Setup Completes

Known Folder Move fails during pilot deployment because the OneDrive sync engine detects a conflict it cannot resolve automatically. The most common conflict is an existing Group Policy folder redirection that maps the Desktop, Documents, or Pictures folder to a network path or a local folder outside the user profile. OneDrive refuses to move a folder that is already redirected by policy.

A second common cause is a stale KnownFolderMoveSource registry entry. When a previous Known Folder Move attempt fails or is canceled, OneDrive writes a registry value that records the source folder path. On the next attempt, OneDrive reads this value and thinks the folders have already been moved, which blocks the new migration.

A third cause is tenant-level sync settings that prevent folder backup for the pilot group. If the OneDrive admin center has Known Folder Move set to Disabled or Silently move Windows known folders to OneDrive is turned off for the pilot group, the client will not proceed past the initial check.

Steps to Fix Known Folder Move Pilot Failures

Follow these steps in order. Restart OneDrive after each major change to verify the fix.

1. Verify tenant-level Known Folder Move policy
   Sign in to the Microsoft 365 admin center at admin.microsoft.com. Go to Settings > Org settings > OneDrive. Under Sync, find Known Folder Move. Ensure the toggle is set to Enabled. For a pilot group, you must also configure the Group policy setting for Known Folder Move in the OneDrive ADMX template. Download the OneDrive ADMX files from Microsoft and deploy the policy Silently move Windows known folders to OneDrive set to Enabled for the pilot security group.
2. Remove existing folder redirection Group Policy
   Open Group Policy Management Console on a domain controller. Locate the GPO that applies to the pilot users. Navigate to User Configuration > Policies > Windows Settings > Folder Redirection. If any folder (Desktop, Documents, Pictures) is set to Basic – Redirect everyone’s folder to the same location or Advanced – Specify locations for various user groups, change it to Not configured. Run gpupdate /force on a pilot machine and restart Windows Explorer. Verify in File Explorer that the folders point back to the default user profile path (C:\Users\%username%\Desktop and similar).
3. Clear stale KnownFolderMoveSource registry keys
   On each pilot machine, open Registry Editor. Navigate to HKEY_CURRENT_USER\Software\Microsoft\OneDrive\Accounts\Business1. Look for a value named KnownFolderMoveSource. If it exists, delete it. Also check HKEY_CURRENT_USER\Software\Microsoft\OneDrive\Accounts\Personal if a personal OneDrive account is present. Do not delete other values in this key. Close Registry Editor.
4. Reset OneDrive sync state
   Right-click the OneDrive cloud icon in the system tray. Select Settings. Go to the Account tab. Click Unlink this PC. Confirm the unlink. OneDrive will restart and prompt you to sign in again. Sign in with the pilot user’s work account. This clears any cached migration state and forces OneDrive to re-evaluate Known Folder Move eligibility.
5. Manually trigger Known Folder Move
   After OneDrive syncs the initial files, right-click the OneDrive system tray icon and select Settings. Go to the Sync and backup tab. Click Manage backup. You should see the Desktop, Documents, and Pictures folders listed with a Start backup button next to each. Click Start backup for each folder. Wait for OneDrive to complete the move. The process can take several minutes depending on folder size. Do not interrupt it.
6. Verify the move completed
   Open File Explorer. Right-click the Desktop, Documents, or Pictures folder in the Quick Access section. Select Properties. On the Location tab, the path should now show C:\Users\%username%\OneDrive - [your tenant name]\Desktop (or Documents/Pictures). The OneDrive system tray icon should display a green check mark with no warnings.

If Known Folder Move Still Fails After the Main Fix

Some pilot machines may have additional issues that block Known Folder Move. The following subsections cover the most common remaining failure patterns.

OneDrive shows error 0x80070005 Access Denied

This error means OneDrive does not have permission to move the folder. The cause is often a file or subfolder inside Desktop, Documents, or Pictures that has inherited restrictive NTFS permissions from a previous folder redirection. To fix this, open a Command Prompt as Administrator and run icacls "C:\Users\%username%\Desktop" /grant "%username%":(OI)(CI)F /T. Repeat for Documents and Pictures. Then restart OneDrive and try the backup again.

OneDrive says folders are already backed up but they are not

This occurs when the KnownFolderMoveSource registry key was not fully deleted, or when a previous attempt wrote a marker file. Delete the registry key again as shown in step 3 above. Also delete any hidden file named .one in the source folder (C:\Users\%username%\Desktop and similar). Restart OneDrive and trigger the backup manually.

Known Folder Move is grayed out in OneDrive settings

The grayed-out state means the tenant policy or a local Group Policy is blocking the feature. Verify that the OneDrive ADMX policy Silently move Windows known folders to OneDrive is set to Enabled for the pilot user. Also confirm that no conflicting policy such as Prevent users from moving Windows known folders to OneDrive is enabled. Run gpresult /h gpresult.html on the pilot machine and open the HTML report. Search for OneDrive to see which policies apply.

Known Folder Move Pilot vs Full Deployment: Key Differences

Item	Pilot Deployment	Full Deployment
Scope	Single security group with fewer than 50 users	All users in the tenant
Group Policy target	Pilot security group only	Entire domain or organizational unit
Folder redirection cleanup	Manual removal of existing GPO for pilot users	Automated script or phased GPO removal
Registry cleanup	Manual on each pilot machine	Deployed via Group Policy Preferences or script
Error monitoring	Manual check of each pilot machine	OneDrive admin center sync reports

You can now resolve Known Folder Move failures that occur before setup completes in a department pilot. Start by verifying the tenant policy and removing any conflicting folder redirection Group Policy. Then clear stale registry keys and reset OneDrive sync before manually triggering the backup. For future rollouts, deploy the registry cleanup as a Group Policy Preference startup script to avoid the same failure on new machines.