OneDrive Admin Checklist: Known Folder Move fails before setup completes for small offices

When setting up Known Folder Move for a small office, the configuration fails before the setup completes. The error appears during the initial sync or at the point where OneDrive attempts to redirect the Desktop, Documents, or Pictures folders. This article explains the four most common root causes in small-office environments and provides a step-by-step checklist to resolve each one. By following these steps, you will identify the exact blocker and complete the Known Folder Move setup without data loss.

Why Known Folder Move Fails Before Setup Completes in Small Offices

Known Folder Move fails before the setup wizard finishes when OneDrive cannot verify the user’s identity or when the target folder path conflicts with existing redirections. In small offices without dedicated IT staff, the most common technical root causes are:

Missing or expired Microsoft 365 license

OneDrive requires an active Microsoft 365 Business Basic, Business Standard, Business Premium, or Enterprise license. If the license is assigned but not yet activated, or if the trial period has expired, Known Folder Move will not start. The user sees a generic error stating “We can’t move your folders right now.”

Group Policy folder redirection conflict

When a local Group Policy or domain Group Policy redirects the Desktop, Documents, or Pictures folder to a network drive or a local folder outside the user profile, OneDrive cannot take ownership of that folder. The setup process detects the existing redirection and stops before making any changes.

OneDrive sync client version older than 19.002

Known Folder Move was introduced in OneDrive build 19.002. If the small office uses an older version of the sync client, the feature is not available. The setup button appears grayed out, or the wizard closes immediately after clicking “Start backup.”

Personal vault or Windows Information Protection conflict

If the user has enabled the OneDrive Personal Vault or if Windows Information Protection policies are active, Known Folder Move may fail during the folder enumeration step. The wizard shows the error “Something went wrong” without additional detail.

Step-by-Step Checklist to Fix Known Folder Move Setup Failures

Use the following checklist in the order listed. Each step resolves one specific root cause. After completing a step, attempt the Known Folder Move setup again before moving to the next step.

1. Verify the Microsoft 365 license assignment
   Open the Microsoft 365 admin center at admin.microsoft.com. Go to Users > Active users. Select the affected user and check the Licenses and apps tab. Confirm that a license that includes OneDrive is assigned. If the license is assigned but shows “Not activated,” sign out of OneDrive and sign back in. The activation occurs automatically during the first sign-in.
2. Check for existing folder redirection via Group Policy
   On the user’s computer, open File Explorer. Right-click the Desktop folder and select Properties. Go to the Location tab. If the path is not C:\Users\[username]\Desktop, a redirection is active. Open the Local Group Policy Editor by running gpedit.msc. Navigate to User Configuration > Administrative Templates > Desktop > Desktop folder. Set the policy to Not Configured. Repeat for Documents and Pictures. Run gpupdate /force in a Command Prompt as administrator. Restart the computer.
3. Update the OneDrive sync client to the latest version
   Right-click the OneDrive cloud icon in the system tray. Select Settings. Go to the About tab. Note the build number. If the build is older than 19.002, download the latest OneDrive sync client from onedrive.com/download. Run the installer. Restart the computer. After the restart, sign in to OneDrive again.
4. Disable Personal Vault temporarily
   Right-click the OneDrive cloud icon. Select Settings. Go to the Account tab. Under Personal Vault, click Unlock if it is locked. Then click Manage Vault and select Remove Personal Vault. This action removes the vault folder but does not delete the files stored in the vault. After Known Folder Move completes, you can re-enable Personal Vault.
5. Check Windows Information Protection policy
   Open Settings > Privacy & security > Windows Security > App & browser control. Under Reputation-based protection, ensure that Potentially unwanted app blocking is turned off. If your small office uses Microsoft Intune, verify that Windows Information Protection policies are not applied to the OneDrive app. Contact your Microsoft 365 tenant admin to create an exclusion for OneDrive.exe in the WIP policy.
6. Provision the OneDrive site if missing
   Open the Microsoft 365 admin center. Go to SharePoint > Active sites. Search for the user’s OneDrive URL, which follows the pattern https://[tenant]-my.sharepoint.com/personal/[user]. If the site is not listed, go to SharePoint > More features > User profiles. Under My Site Settings, click Setup My Sites. Wait 10 minutes, then sign out of OneDrive and sign back in. The site will be created automatically.
7. Run the OneDrive reset tool
   Press Windows key + R. Type %localappdata%\Microsoft\OneDrive\onedrive.exe /reset and press Enter. Wait for OneDrive to restart. After the reset, sign in again and attempt Known Folder Move from OneDrive settings > Sync and backup > Manage backup.

If Known Folder Move Still Fails After the Checklist

OneDrive shows “We can’t move your folders right now” after all steps

This error occurs when the user’s OneDrive site is in a read-only state or when the tenant has a storage quota that is nearly full. Open the SharePoint admin center. Go to Active sites and select the user’s OneDrive site. Check the Storage limit value. If the used storage is above 90 percent, increase the storage limit or ask the user to delete files. Also verify that the site is not set to Read only under Site collection administration > Site collection features.

Desktop folder disappears after Known Folder Move fails

When the setup fails midway, the Desktop folder may appear empty because OneDrive created a new empty folder in the user profile. Open File Explorer. Navigate to C:\Users\[username]\OneDrive - [tenant name]\Desktop. If the original files are missing, check C:\Users\[username]\Desktop. If that folder is also empty, the files were moved to C:\Users\[username]\OneDrive\Desktop before the failure. Copy the files back to the original Desktop folder. Then run the OneDrive reset tool and start Known Folder Move again.

Error code 0x8007017C during Known Folder Move

This error indicates that the file system does not support the required reparse points. Known Folder Move uses symbolic links to redirect the folder. If the user’s Documents folder is located on a drive formatted with FAT32 or exFAT, the operation fails. Move the Documents folder to an NTFS drive using File Explorer > Properties > Location. Then retry Known Folder Move.

Known Folder Move vs Manual Folder Backup: Key Differences for Small Offices

Item	Known Folder Move	Manual Folder Backup
Setup method	OneDrive settings > Sync and backup > Manage backup	Drag-and-drop or copy-paste files into OneDrive folder
Folder redirection	Redirects Desktop, Documents, Pictures to OneDrive automatically	No redirection; files exist in both locations unless manually deleted
File sync behavior	Syncs all files in redirected folders continuously	Syncs only files placed inside the OneDrive folder
Group Policy support	Supports silent configuration via Group Policy or Intune	No Group Policy support for individual user folders
User awareness requirement	No user action needed after IT sets up the policy	User must remember to copy files to OneDrive
Recovery after reimage	Folders are restored automatically during OneDrive setup	User must manually restore files from OneDrive

Known Folder Move is the recommended method for small offices because it eliminates the risk of users forgetting to back up their Desktop, Documents, and Pictures folders. Manual backup leaves data on the local device only and creates a single point of failure.

Conclusion

You can now identify and resolve the four main reasons Known Folder Move fails before setup completes in a small office: missing license, Group Policy redirection conflict, outdated sync client, and Personal Vault or WIP interference. After applying the checklist in order, run the Known Folder Move setup again from OneDrive settings. For recurring failures, check the OneDrive site storage quota and the file system format of the target drive. As a proactive measure, enable silent Known Folder Move via Group Policy by setting the Computer Configuration > Administrative Templates > OneDrive > Silently move Windows known folders to OneDrive policy to Enabled before deploying new devices.