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You're correct that it's typically recommended to keep user files and other data on the D: drive (user volume) in Amazon WorkSpaces, mainly because this data is backed up regularly by AWS.
The C: drive (root volume) contains the operating system and any applications, and is not backed up. If a hardware or software problem occurs that cannot be recovered from, AWS might have to replace the root volume with a fresh installation of the operating system and applications, resulting in the loss of any data saved there.
However, as you've mentioned, because OneDrive syncs its data to the cloud, any files stored in OneDrive on the C: drive would be protected against loss, even if the root volume has to be replaced.
In terms of cost, increasing the size of the root volume does increase the cost of the WorkSpace. As of my knowledge cutoff in September 2021, the cost for additional root volume storage is the same as the cost for additional user volume storage. You can check the current pricing on the Amazon WorkSpaces Pricing page.
One thing to note is that the maximum size of the root volume is smaller than the maximum size of the user volume (80 GB versus 2000 GB, respectively, as of my last knowledge update in 2021), so depending on how much data your users have in OneDrive, this could be a limitation.
Also remember to consider the performance implications. The root volume could experience higher I/O demands, potentially affecting the performance of the operating system and applications.
As always, it's best to test this change with a small group of users first to see if any issues arise.
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