There seems to be an issue deleting files from iCloud (the version delivered through the Microsoft Store) that uses “Files on Demand” (similar technology to OneDrive).
The service creates a "file" that is attribute tagged as a SparseFile (which lets it take up 0 bytes but seem to be X bytes big), ReparsePoint (likely to trigger the filter driver), and Offline (the same tag used by the old Offline Files, and used in the same way to denote the file isn't locally present). Then, when a program attempts to open said file, access to the file goes through the FS filter list, hits "CldFlt" which checks if it's tagged "Offline". If yes, then the filter asks the OneDrive sync service to hydrate the file before handing it off to the next filter.
Thought to be related to:
https://community.webroot.com/business-product-releases-26/windows-10-fall-creator-update-bug-fix-305469
I believe Webroot is preventing deletion of this through explorer, but I do seem to be able to delete through command line.
Any thoughts?