Can’t access some folders, despite service running as system user
should dispel that standalone comment, although you did try further tests.
If you wish to (carefully) try a SYSTEM Command Prompt, recipe is there.
Also be aware that ACE ordering in an ACL might matter, as discussed at
is an example of a test that I would hope would show an accurate answer.
It looks like Duplicati code above doesn’t look much at access error detail.
Process Monitor might give a better view of exactly what Windows rejects.
Note that the view may vary with altitude (where in the stack got watched):