OneDrive folder in Finder using local duplicates

Since upgrading to Sequoia, my OneDrive folder in Finder is creating and opening locally downloaded duplicates rather than the version from the cloud. As a result, the autosave feature on Word documents doesn't work, and any additions made on my Mac are therefore not reflected on the actual documents.

Whenever I open the files via Word itself, it opens the correct cloud versions of the documents, however I prefer opening via Finder, as it is much easier.

Any assistance would be appreciated.