If you try to run an upgrade to Windows 10, version 2004 or a later version, you might encounter an update compatibility hold and receive the message, “This PC can’t be upgraded to Windows 10. Your PC settings need to be adjusted before upgrading to the latest version of Windows 10.”
An issue was found when devices have been manually configured to use user shell folders that are within the Windows.old folder. During the upgrade process, the old Windows.old folder is deleted and replaced with the current Windows folder before you install the new version of Windows 10.
Important: We do not recommend keeping any user data within the Windows.old folder as the folder might be deleted by Disk Cleanup. This behavior might occur when you run Disk Cleanup manually or when it runs automatically.
To safeguard your upgrade experience, we have applied a compatibility hold on these devices from installing Windows 10, version 2004 or a later version.
To mitigate the safeguard, all user shell folders must be moved to a location outside the Windows.old folder.
To do this, follow these steps on each user profile on the device:
Open File Explorer. If the icon is not pinned to the task bar, select Start, type File Explorer and select it.
Select This PC in the navigation pane.
Right-click or long press the first folder in the Folders section in the right side pane and select Properties.
On the Properties dialog box, if the Location starts with Windows.old, continue to step 5. If it does not start with C:\Windows.old, you can restart on step 3 again for the next icon in the Folders section of the right side pane.
Select the Location tab, select the Restore Default button.
Select the OK button on the Properties dialog box. If you are prompted to create a folder, select Yes.
On the Move Folder dialog window, select the Yes button to answer Do you want to move all the files from the old location to the new location?
Wait for the operation to complete and restart on step 3 again for the next icon in the Folders section of the right side pane.
After you have verified that all user shell locations are outside the Windows.old folder, you should be able to update to a later version of Windows 10. Please note, if there are no other safeguards that affect your device, it can require up to 48 hours before the update to Windows 10, version 20H2 or Windows 10, version 2004 is offered.