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Those aren't UNC, which start with a double-backslash: \\
Those are just URLs, using the file protocol. Anyway, "opens the subfolder" means in the File Explorer? And the "identically named .ino" is "DFRbasics-RotEnc26-e1.ino"?
Is the behavior any different if you navigate to that folder manually and open the same file?
That (file://terry-2016/Users/terry/Dropbox/Electronics/Arduino/Arduino%20(Sundry)/18650Charger-1.jpg)
is what I get on the Windows clipboard after using the tool Path Copy in the context menu (right click menu) of File Explorer. Are you saying it’s not a UNC? Anyway, that’s what I’m working with.
http and https are the schemes you might be most familiar with, but file is also a scheme. In the early 1990s, both conventions were gaining prominence, but in the end I guess URL won, if that's what File Explorer is using.
Aside from the scheme, the direction of the slash is the big difference. To support UNC, the code has to recognize the \ as a special character, with the \\ indicating the start of a UNC path. But that's not what you're talking about: no backslashes in sight.
BTW, having the Arduiino sketchbook in a network drive like Dropbox is a bad idea, but maybe not directly an issue either.
To avoid cluttering the sketchbook, on some setups I have a nested folder with "more sketches"
one/
one.ino
two/
two.ino
more/
alpha/
alpha.ino
beta/
beta.ino
although I can't say I've ever double-clicked an .ino in the File Explorer to open the sketch. Don't have Windows handy to try it.