Hello Chris,
Personally I'm not an iCloud user, but see the benefits from using it. Especially for normal documents and things like photo's.
This article here:
https://www.imore.com/how-save-your-desktop-and-documents-folder-icloud-drive-macos
mentions how you can move your documents out of the iCloud part. Basically it is a move operation that you can do with drag & drop.
I agree with you that a virtual machine should not be synced to iCloud, for many reasons.
Fusion does not care where your Virtual Machines live, but it is probably a good idea to keep them under your user account.
So in your case I would create a new folder directly under your home folder.
Let's call it "Virtual Machines" (if you want to use a different folder name then no worries, you can)
Shut down your VM.
Commit any open snapshot(s) and wait until it is finished.
Shut down VMware Fusion.
Navigate to the Documents/Virtual Machines and drag your VM "Windows 10 x64 2" to the new "Virtual Machines" folder.
Let it move. If there's data of the VM in iCloud it might take a while to complete.
Once done, start VMware Fusion.
It will complain that it can no longer find your existing VM. It is safe to delete / remove it from the VM Library.
Add the moved VM to VMware Fusion again using File Open.
On start, when VMwre Fusion asks "Did you copy or move it" answer "Moved It"
If you need more detailed steps or have more questions then do not hesitate to ask.
PS: It might have been less confusing to first remove the VM from your Fusion Library before moving, but it is a potentially catastrophic step where you can remove the VM not only from the Library, but also from disk. This is why I moved that step to after moving the VM.
PS2: You might want to repeat those steps if you have other VMs in the Documents under iCloud folder.
hope this helps,
--
Wil
