My organization uses OneDrive that mimics the old 'documents' folder, i.e.:
C:\Users\user.name\OneDrive - XYZcorporation\Documents
Placing the repository into the OneDrive documents folder breaks the TortoiseGIT overlay.
For the remote/local repository, I've applied the fix of modifying the registers to bump overlay priority (adding padded spacing in ShellIconOverlayIdentifiers), but still no overlay.
I found that moving the repository locally (C:\Users\user.name\Documents) will re-enable icon overlays.
Does anyone have a solution so that I can place repository in the OneDrive documents? Of course my organizations locks down OneDrive custom selection of folders to back up.
If TortoiseGIt overlays work otherwise, this seems to be a Microsoft issue.
Folders that are synchronized using the new cloud API, do not support overlay icons (any more). This is independent to the "normal" overlay icon issues as summarized in https://tortoisegit.org/support/faq/#ovlnotshowing.