My best guess here is that you may not have deleted / flushed your cache and you are seeing some kind of old data because if it? it's an easy mistake to make if you are running a few different test setups. I'd try deleting the whole cache and DB folders and letting it reconstruct from scratch just to make sure it's not that.
EDIT: actually - i notice that you seem to try to point to a file in your DB path. I've always pointed it to a folder and the DB file will be put there. Not sure if that matters, but you may just want to shorten both to C:\Cache to test.
Oh yea, that would make sense. You absolutely should keep the cache folders separate from the VFS folders as they are completely separate systems. Glad you got it sorted!
Good to know for troubleshooting in the future: you can run your rclone with -v (verbose output) or -vv (debug output) to get more info. I think the output from either would probably have notified you of permission errors in this case.