OP wrote:
"If I am making a Time Machine backup and excluding the Macintosh HD>Users>dskstudio path therefrom, would I not just erase/reset the Mac and restore from the new Time Machine backup that excludes that path?"
I've never used tm.
But my prediction is... you'll just be digging deeper the hole you're in now.
Create a CLONED backup using CCC or SD.
That's where you begin.