Is this folder locally available?
Yes- I can access it through finder and Obsidian but can’t add it to DT3. I tried closing out of obsidian first but that didn’t have any effect
What OS?
And a screen capture from the Finder could be useful.
I noticed that your Obsidian vault folder is on your iCloud Drive. It’s my understanding that DevonThink works best when you index files and folders on your hard drive. When you use iCloud, you’re syncing twice, once to iCloud and once to DT.
I keep my Obsidian vault on my hard drive and index it to DT. This has been working like a charm for several years and this is how I see my Obsidian files when I am away from my Mac.
Technically, it’s not syncing to DEVONthink. DEVONthink is just watching that Finder folder. However, we do agree that indexing works best with folders that aren’t under the control of some cloud service. 
I want to use the Obsidian app on my phone without paying for an Obsidian cloud/ syncing service which is why my vault is in my iCloud Drive (as opposed to only being able to access my obsidian notes through DT2go app on my phone). My DEVONthink database is stored locally on my computer. I have been reading multiple academic research workflow posts and many people state that they index their obsidian vault folder (located in their iCloud drive based on photos) to DT3 which is why I’m asking here
Update- I was able to index the vault folder w/in the Obsidian folder from with DT3: File>Index Files and Folders… pressing ⌘⇧G and pasting the folder path /Users/orice01/Library/Mobile Documents/iCloud~md~obsidian/Documents