Screenshots on Desktop redownload from iCloud when opened

I must have gotten it backwards. Did you use the right-click menu as I suggested in the link? You can choose "Keep Downloaded." Are you saying that you did this and it didn't work?

What is your storage on this Mac? At System Settings>General> Storage, my Mac says 745 GB of 1TBB used. What does yours say? If your  free storage on your Mac is less than 10%, then some operations become problematic.

AceNeerav wrote: …why do i need to mark the file as downloaded when it was made on this mac itself?

You use "Keep Downloaded" to keep the file locally on the Mac. I believe that's what you want.

You may want to re-read the section on Optimize Mac Storage in the Link I sent.

AceNeerav wrote: Every time I try and open a screenshot, it redownloads from the cloud.

Any file you use is locally on your Mac. Files can be copied to iCloud for use on other devices, but whenever a file is used by a device it is on that device. You Mac's iCloud Drive is a folder on your Mac.

See this:

Understanding iCloud Drive