Why do I have two different iCloud folders..and my desktop folders disappeared

I have iCloud+ with 2TB storage, Apple Music, Apple TV, etc.--the one that's around $37/mo I have been syncing documents and desktop with iCloud.

Yesterday, I changed my iCloud password to a longer string. I changed it on my MacBook in Settings > Sign-In & Security.

Today, my desktop files don't show up when I started my MBP. In Finder, I seem to have two different iCloud folders:

One is just "iCloud." In that one, the subfolder "desktop" is now empty.

The other one is "macintosh HD > Users > (mylogin name > iCloud Drive". This one has Documents and Desktop folders and the Desktop folder has some filed but not the ones that were on the screen desktop yesterday.

If I move a file in to the plain "iCloud" folder, it shows up on my screen desktop.

The missing files are present when I log into iCloud on the web. There was not problem logging into iCloud web using my Apple Watch as the passkey.

• What are there two iCloud folders, one appended with "drive"?
• Which one should show up on the screen desktop
• Why would my desktop files from yesterday disappear today?

Settings as attached.

MBP M1 64GB Sonoma 14.7