Can't activate iCloud Drive with User account data on external SSD
I got an M2 Max Mac Studio a couple of weeks ago. I went with just the base spec (512GB storage, 32GB RAM) with the plan of keeping all of my User data on an external SSD and only really system and application files on the internal drive.
I went through the process of directing Mac OS to the new folder (via System Settings > Users & Groups > Advanced Options > Home Directory, and pointing it toward the "copied" User folder on my external SSD). After the forced reboot, Finder and other apps (Music, Photos, etc) see all of the files in the external SSD and that all behaves normally.
However, as soon as I migrate the location for my User folder to the external drive, iCloud Drive turns off. I have tried turning it back on (via System Settings > Apple ID > iCloud > iCloud Drive > Sync this Mac) which usually results in System Settings and Finder both crashing, being met with an error that specifies that there is a missing helper application, and even if I wait it out for hours, the best outcome is that it turns back off iCloud Drive.
I have 1.51TB available of my 2TB iCloud Drive. I have 214GB of the 512GB internal storage available.
I have signed out of iCloud on my Mac altogether, and then signed back in (signing back in also seems to take anywhere from 30 minutes to 4 hours, once the User data is on the external drive!).
I have spoken to numerous techs via Apple Care. We have tried in Safe Mode. I have created a new User account, which I am then able to turn on iCloud Drive so long as the User data is in the default location in Macintosh HD > Users > User, but as soon as I copy that User folder, paste it on an external drive (SSD > User), and then point Mac OS to use that location, it again disables iCloud Drive and I am met with the same issue.
Currently on Mac OS 13.5.
External SSD is a Samsung T7 Shield, 2TB, formatted as ExFAT plugged directly into one of the rear Thunderbolt ports.
Everything else runs fine and as expected, unless I want to have my User data on the external drive and also use iCloud Drive. Surely I can't be the only one trying to achieve this?
I am supposed to have an Apple Care senior technician call me later this arvo, but hoping for some advice from the wider community also in case they don't have any specific ideas.
Thank you in advance for any help and suggestions!
Mac Studio