macOS Sierra, ~/documents in iCloud, and Parallels vm

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Parallels User

I'm about to upgrade to macOS Sierra, and I'm contemplating moving my Desktop and Documents folders to iCloud Drive. But my Windows vm is installed in the default location, i.e., ~/Documents/Parallels. As I understand it, on a Mac with sufficient drive space (the drive in question has about 450 GB free out of 1,100 GB), everything in the ~/Documents folder remains local. But I'm concerned about breaking file references, since the Finder maps to the ~/Documents folder differently with iCloud Drive enabled (I had to edit a bunch of file references in Filemaker databases as a result).

Does anyone have experience in using this feature of Sierra with a Windows vm in the ~/Documents folder?
 
I have a related question. I HAVE moved to Sierra and chose to have my docs in iCloud Drive. While a copy of the files remain local, iCloud does replicate to the cloud as and when, and of course this includes a nearly 32Gb VM file for my Parallels 12 Windows 10 Anniv. so it's a lot of transfer. Is there a step by step guide to how to reconfigure so that I can move the .pvm out of the documents folder from which it will go to iCloud Drive to a non-iCloud local-only folder where I can back up with Time Machine in my regular offline backups?
 
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