Wondering if anyone could give insight on how to overcome this problem that a teacher of ours is facing. I asked her to create this video to better explain the situation. Look forward to your responses.
Perhaps you should post your query in the Microsoft Teams community. There are many more members there (60k vs 6k) and your query is not specific to the Educational version. Maybe do a search there first - your problem may have already been raised there. I remember that it is not the first time that I see something like that. Sorry that I cannot be of more help right now.
The Add cloud storage option only allows you to add a Document Library (the entire thing) and not a direct link to a subfolder. You can see this in step two when she provides the link and it shows the Document Library location only.
Workaround #1: A workaround could be to add a website tab with the copied SharePoint link although you may need to confirm the permissions for the folder is read-only and also note that students can still click back into the main directory if they wanted to (not that they would I would think).
Workaround #2: Place your content into a new Document Library and do per the video. That will show the content and any subfolder content within that specific library solving your issue.
Sorry there's no better news on this front but that's how it works for now.