Moving Home Folder doesn't work properly

I had my user folder on secondary drives in the past and wanted to do the same with my m4 Mini on Sequoia.

So I copied the user folder (iCloud deactivated) to the external TB4 drive and in SysPrefs > Users > Advanced Settings, I changed the user folder to the new folder on the external drive (it includes the Library folder).

In my case the new user folder location is /Volumes/Data/username

macOS asked to reboot, I did and ended up with a blank user (including the first login setup procedure). After checking what the User folder is now, it turns out it is in a Folder "Data" inside /Volumes instead of the external drive. The external drive is now /Volumes/Data 1/

If I redo the procedure, a new folder "Data 1" is created.

Even if I chance the Home folder using dscl the result is the same.

The external drive is a NVME, formatted with APFS and a GUID Partition Map.

Any Ideas why this should not work on Sequoia?