I have setup nextcloud in a VM on my desktop, I’ve forwarded the ports, setup a domain and linked it to my desktop IP address, it went surprisingly smoothly, the only problem is… it’s running in a VM, so I cannot seem to just use a windows folder as the storage space which I can just drag and drop files into (like say, OneDrive). What are my options for setting up something like that?
You can use the external storage app and use storage via network (on a NAS, different VM machine, …).
If you want the storage within your VM, you need to check your VM solution what is possible. Some allow to use USB storage and perhaps even certain folders directly inside a VM.