Important note: nothing posted here is endorsed by Microsoft. I am a OneDrive user who was looking for a solution to the same problem others have had here. Thanks!
I think it's because it's removable storage. I had the same problem when I tried to install Adobe CS6 to a MicroSD card on my Surface Pro 3.
The easiest way to fix this is to mount your MicroSD card in an empty NTFS folder, in addition to its assigned drive letter. You can do this is Disk Manager (diskmgmt.msc) - just right-click on your card and select "Change drive letters and paths..." It's
pretty straightforward from there. Just make sure to mount your card to a folder on C:, and select that folder when you set your OneDrive location.
Update 7/30/2015 and 8/5/2015:
It looks like the OneDrive client in the RTM version of Windows 10 does not allow syncing OneDrive to an SD card via the empty NTFS folder method
if there isn't enough free space on the C: drive for the data to be synced.
If you have trouble with the scheduled task method of auto-mounting your VHD, you can try
this freeware utility.
If you want to enable BitLocker on the VHD (which is recommended if the MicroSD card on your tablet is easily removed and you're concerned about the security of your files), user
golub provided this useful information:
I found my issue: I had enabled bitlocker on the vhdx file (it's my personal data after all, a bit too easy to steal the SD card and read all) and it was not unlocking it.
My VHDX file was mounted as a O: drive (O as OneDrive :-)).
I turned on "auto-unlock" on the same bitlocker menu (which means on this tablet it will be auto-unlocked at boot
And now when I boot the VHD does mount without a problem!
Important Update 11/15/2016:
There is a known issue with the latest big Windows 10 update (November Update, Threshold 2, Update 1511) that causes the update to hang at 44% if a MicroSD card is inserted while the update installs. I haven't confirmed the below suggested fix because my
own tablet isn't running Windows 10 right now, but you can try this if you run into the 44% hang problem:
Exit OneDrive (right-click the white cloud icon in the lower left corner of your screen, by the system clock, and click Exit).
Disable OneDrive from starting automatically at login:
Hit Ctrl+Shift+Esc to open the Task Manager.
Click the Startup tab. If you don't see tabs, click
More Details on the bottom left corner of the Task Manager window.
Right-click on Microsoft OneDrive and select Disable.
Safely remove your MicroSD card by clicking on the icon in the system tray that looks like a little USB plug with a green checkmark over it. Select your MicroSD card to eject it.
Now you can install the update.
Once the update is done, you can reinsert your card, re-enable OneDrive autorun at login, and reboot to start OneDrive normally.
Microsoft has fixed the 'OneDrive/SD Card' issue. A VHD is no longer required (although I will probably keep using my veracrypt method for security and/or for programs that will not install on the SD card).
Right click the OneDrive icon in the System Tray (may have to click the up arrow to 'Show hidden icons'),-> Settings, on the 'Account' tab, Click 'Unlink OneDrive'. Open OneDrive (start->All Apps) After
you log into OneDrive, you will see where it wants to put the OneDrive folder, change it to the OneDrive folder you previously created on the SD card.