> Now you have a cloud dependency to access your local files

That doesn't make sense and isn't how signing into windows with a microsoft account works now.

> What happens if your Microsoft account gets blocked (rightfully or wrongfully)?

A microsoft account that was created to set up a computer and then never touched again?

> What happens if the next Windows update, Microsoft "helpfully" activates onedrive sync of your folders by default and exfiltrates your data? (HTC did this to me before with their Sense UI).

> Maybe the latter leads to the folder if OneDrive syncs some copyrighted data to their service they think you're pirating?

Seems a little farfetched to me. I'd rate it on a similar level of risk to apple requiring me to create an id if I want to use any apps on my iphone.