Brand new WVD with FSLogix enabled - can't create desktop folders or open start menu

[Jgq85]

I created a brand new WVD hostpool and workspace (first one) in the Azure WVD portal. I installed FSLogix x64 agent on each session host VM and enabled it in registry. the path points to a UNC path on a Windows VM for the profile. I see the profile vhd file get created when I login to the WVD environment. 

However if I try creating and naming a folder on the desktop, I get "can't find the specified file". 

I can't even click the Start menu. 

Anyone seen this or know what it can be? 

It's working fine in another WVD environment I setup the same way (classic/Fall). 

[#2]

Update:

It looks like it's just one user that it happens with. If I try a new regular test account I don't have the issue.

Do users who are local admins get treated differently with FSLogix services maybe?