If you keep (a copy of your) Backup Checksum File-list on C drive, you don't need the real Backup folder to be present!
Only before updating/writing Backup you would be asked to insert it into the CF slot
So, this is some special MD5 file, which is MD5 of backup folder on other drive in fact?
Correct
The idea is: as less as possible use/read of Backup folder!
After Backup is updated you can, for safety reason, copy/backup updated Backup MD5 Checksum List
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