iCloud is making duplicate Desktop and Documents folder

So, I had "Store in iCloud" turned on under Storage Management earlier, but not sure how that got turned off and now that my mac is struggling for storage I was looking around in the settings and realised it got turned off somehow. So I turned it back on, but now iCloud has created a duplicate copy of the Desktop and Documents folders. ‍ 

I would really like everything to be under the same folder. I have a hunch that even if I copy everything over from the new duplicate folders to the old ones, macOS will just create another copy when iCloud backup initiates. Can anyone confirm, or possibly provide a better solution?

System is taking over 128GB of space out of my 250GB SSD. Turning "Store in iCloud" feature is not really clearing any space for me. Not sure if this is actually working. Hardly got 40GB left.