Final update: Figured I'd add this in case anyone else did a search. After review, it appears the files DO eventually end up being deleted (tested with 0 day deletion) however the files within folders aren't being added to the "To Be Deleted" notification if enabled (and a delay is set). The only real impact of this bug is the inability to force delete these files early. They will, however, be deleted from the backup as expected after whatever delay is set for locally deleted files.

Update: After some testing, this issue occurs in Versions: Latest 6.3, 6.2.2, 6.1.1. The issue is NOT present in 5.8.6 and 6.0.2.22 (I had stored some of these old versions still for some reason).

I'm actually seeing this issue in the current release. I'm backing up Windows Server 2019 leveraging DrivePool to both USB and Backblaze. This occurs using both filesystem and UNC paths. I have attempted uninstall and reinstall, multiple repo syncs, and both Simple and Advanced configurations. The result is the same. If a file is deleted within a directory (and local deletes are set to 7 days), it's detected and listed for deletion. If the folder the file is in is deleted, it's not detected and the file and folder remain in the backup indefinitely. No items are de-selected, nor are backup plans changed to cause any orphaning.