Can't change the "New documents will save to" option

Hi, I've observed a strange behavior on my laptop since a couple of days. Suddenly I realized that all my Documents were not being saved in my user profile folder but to OneDrive instead. This has been caused by some of OneDrive updates, I'm pretty sure, as previously my docs had for sure been saved on my C drive.

Regardless, I can't do either of two things:
- manually change My Documents path in folder properties,
- switch the option "New documents will save to:" in Settings/System/Storage - the option is active but each time I hit "Apply" it reverts back to OneDrive.

I even tried to manually change the folder location (User Shell Folders key) in the registry, but it doesn't work either...

Any suggestions how to force it?