Please remember that by default there is a 10s delay for detecting new additions and changes, and a 60s delay for detecting deletions. There are also known issues with some file systems or network drives, which simply don’t support file watching.
Something seems broken then. What is the OS and file system here? You may want to enable watchaggregator in debug logging and see if there is any activity there.
Windows 7 x64 NTFS on both sides. It uses FDE with DiskCryptor, though I think it is not related and all standard ways like FindFirstChangeNotification should work.
I have no experience with DiskCryptor, so can’t speak about that, but how about doing some testing with a folder on a USB stick or something to check whether the issue is system-wide, or only limited to the encrypted storage?
Should work, but doesn’t look it does work. I suspect if you use a vanilla volume without encryption etc, it will work, but there is not much we can do here.