Disable iCloud Drive for a specific folder?

I believe your best solution would to be not to enable Desktop & Document syncing

If you turn off Desktop and Documents, (System Preferences ➔ iCloud ➔ iCloud Drive Options ➔ Documents ➔ Desktop & Document Folders ➔ Off) your files will stay in iCloud Drive in the cloud and a new folder is created on your Mac where the files you have stopped syncing will be written to.

If you don’t want the files to remain in the cloud and/or you have doubts about the automatic recovery of files to the new folder you might do the following instead...

Create a temporary folder in your home folder and move all your documents there from iCloud Drive. (this step removes the files from the cloud and moves the files on your Mac in one step.

Once complete turn off iCloud Drive for Documents and Desktop (System Preferences ➔ iCloud ➔ iCloud Drive Options ➔ Documents ➔ Desktop & Document Folders ➔ Off) and move your documents from the temporary folder to the appropriate locations (Documents/Desktop) and delete your temporary folder.

You can then add your own folders to iCloud Drive and include as many or as few of the documents you previously synced through the desktop and documents.

I use Parallels and do the same thing.

But i still want it to sync documentation between the two computers.

But you are not forced to keep all documents in the Documents folder. My Documents folder is nearly empty and only contains the items that some apps insist on installing there, plus the items I want to sync other devices to. Otherwise I ignore it and use my own folder "My Documents", that I am storing locally in my Home folder, outside "Documents".