OutlookFolderPath and %LOCALAPPDATA% environment variable expansion issue

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We are running FSLogix 2.9.7838.44263 Office container on Windows 2016. Our GPO sets OutlookFolderPath -> %LOCALAPPDATA%\Microsoft\Outlook. All of a sudden each time a user launches Outlook its repopulating the cache from scratch. Looking in the ODFC logs we see that %LOCALAPPDATA% is being expanded to the SYSTEM location C:\Windows\System32\config\systemprofile\AppData\Local. I have no idea why this has started or how it is all of sudden expanding this to the system location instead of the user one. Is there any debug logs we can enable to see what's going on here?

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