Welcome to the forum @lbit
Installing Duplicati on Windows has a note “If you want to start the server component another way (i.e. by registering the server component as a Windows service), you have 2 options:” Which if any did you use?
If you’re seeing different users get different Duplicati, possibly you’re not using the service you installed…
Duplicati stopped working after logout has notes on a current forum issue that has two Duplicati running.
Correct, but for a Windows service the user by default is SYSTEM, so data is in C:\Windows\System32\config\systemprofile\AppData\Local\Duplicati which Windows wipes into Windows.old on the twice-yearly version updates, so inventing a safe location as you proposed is a great way to avoid harm.
Duplicati components would be good background if you’re not already aware of the various components.
Migrating from User to Service install on Windows gets into alternative locations, and also mentions the –portable-mode option which has a hardcoded location in the program’s area to hold the program’s data.
This is how the service should work by default, however the password protection interferes with running Duplicati.GUI.TrayIcon.exe in --no-hosted-server mode (if you need the icon, e.g. for its status icon). That’s a side effect of inability to access the SYSTEM profile, but will probably work if you don’t use that.