Here is some strange behavior, I\'ve got a PowerShell script that converts an XLSX file into a CSV file. This script runs in the console without issue.
Trying to sc
AFAIK There are no official documentation from MS about this issue/limitation. It should be reported as a bug (contact Microsoft Support).
The requirement of a desktop folder (which SYSTEM doesn't have by default) shouldn't be necessary for excel to run and at least it should have created the folder if missing.
I don't believe Microsoft supports what you are attempting to do. According to this documentation, Microsoft states:
Microsoft does not currently recommend, and does not support, Automation of Microsoft Office applications from any unattended, non-interactive client application or component (including ASP, ASP.NET, DCOM, and NT Services), because Office may exhibit unstable behavior and/or deadlock when Office is run in this environment.
The documentation appears to be for Office 2003, but I'm not sure if they have changed there stance since then as I haven't found other documentation stating support. As recently as 2009, this MVP reiterates that it isn't supported. The recommendations appear to be to use OpenXML SDK for non-interactive automation, or another third party library for working with the file format directly.