@MilesAfton Hello. Hmm honestly I’m not sure what could have happened. Pencil2D does not create a .backup file. This feature doesn’t exist. You always have to save extra copies manually.
Regarding why it can’t open certain files, it could be that the files have been corrupted individually, however it’s impossible for Pencil2D to corrupt files separately. Only the currently opened file has a chance of being damaged if you are saving the file, otherwise it’s not possible that Pencil2D can damage all files.
Since you mentioned a Windows update I answered a similar issue a month ago and linked this article to the user: https://www.howtogeek.com/658194/windows-10s-new-update-is-deleting-peoples-files-again/
This article is from 2020 and says that Windows can delete files after receiving an update. I don’t know if it is possible that a Windows update can corrupt your files, however the possibility exists.
For now try to follow the guide to try and recover whatever is inside the Pencil2D files. Just now that depending on the damage on each individual file has, you might not be able to recover all the files.