New
#1
Probably because the bottom/yellow is the actual folder in C:\Users\USERNAMEHERE and upper one should be there. I'd see if the one in Users has inadvertently been moved or hopefully just copied.
As your diagram indicates, you have linked your user files to OneDrive.
The Desktop you have currently selected in your diagram is in the cloud at OneDrive\Desktop whilst the other is probably at C:\Users\%UserName%\Desktop.
Denis