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Please dont bother with this, and use NextCloud or any of the various NextCloud providers.

Neither OwnCloud, nor NextCloud, support OneDrive for external storage as far as I am aware.

Yes? The point is to replace all of OneDrive, not just the sync client.

It doesn't seem to have client-side encryption. Is that correct?

If you own your client and your server why do you need encryption?

Correct