OneDrive as well. At least that was my recent experience after a fresh install of Windows 11.
Theoretically at least, L&L could code around this with error handling, by having Scriv wait a bit then try again if a doc isn’t retrieved on first try. (The syncing service is supposed to retrieve the file when it’s requested.) But the really insidious side effect of the Files on Demand storage setting is the high probability that Scriv’s zipped backups will always be incomplete. Even if L&L managed to code around the doc not found issue, so that Scriv could work better with Files On Demand, there’s nothing to be done about the backups.