Got it. It was so long ago I set it up, I can’t remember if there were any specific iCloud Drive/Obsidian steps on the desktop.
Are you able to use the Obsidian vault picker > Open Folder as vault > and open the vault that’s in iCloud Drive/Obsidian ? Is the vault current?
Might not be helpful for your situation, but have a look through these posts:
Update: I just noticed the iCloud desktop setup steps in sync help. As there’s already an Obsidian folder in your iCloud Drive, you might not see this option, but worth trying: