I contacted Microsoft Support for this and we have fixed the issue.
It blew my mind as my Explorer got faster even if there is no reason for this method to be effective but here are the steps I did.
- Open cleanmgr
- Select Windows installation drive
- Click on "Clean up system files" (bottom left-sided button)
- Again select the windows installation drive
- Select all of the entries in the list above
- Click ok and confirm.
- Restart PC
And weirdly, even though my PC was already reset. The explorer was faster.
At this point I don't know if cleanmgr is just a cleanup tool, I think it does a bit more.
Tbh, because of the struggle, I had overall I am unsure if this is a permanent solution but it definitely helped.
Maybe this helps someone out one day.