This is the same issue I have. I have a vault on my MacBook that is located in an iCloud Drive folder (iCloud:Writing:Notes).
I want to be able to access this folder on my phone, but it seems that the iOS app can only access folders within Obsidian’s iCloud Drive folder, so the only way I could get it to work was to move it to iCloud:Obsidian:Notes.
Hopefully a future update will allow the app to recognize other folders so I can put my notes back in the writing folder, but for now it seems like the only option is to move that vault to Obsidian’s folder in iCloud.