I also have Steam Cloud Save disabled because of what was going on with this game and another game I play that had problems with the Cloud Save.

After I saved my character when I finished playing, the patch notification that they are saved in an outdated state went away and I could find my current character save in the new “characters_local” under AppData (the old save location "characters" is still in the dir with you old character save in it, but no longer used by the game)

The 20 Jun 2022 patch added a fix to the Steam Cloud save and with that a different location for character and world save. The game now will :

Steam Cloud:
* Cloud save files will now be stored in Steam/[YourIDNumber]/892970 instead of AppData

* Local files will now be stored in “worlds_local” and “characters_local” under AppData and no longer be synced to cloud to avoid sync conflicts and dataloss when using multiple accounts on the same machine, and when using dedicated servers.

* Files still in the old file structure will be moved to the Steam Cloud or new local folder when used and a backup will be kept