No, it’s probably just resetting the exclusion list when you adjust the settings.
Note that excluding the folders probably isn’t doing what you want anyway. It does what you ask literally, so it’ll exclude the folders, but the contents of those folders will still be included unless you deselect every file one-by-one. It almost certainly isn’t worth it.
Also note that you can reach absolutely any file without adding them all to the catalog. Select Desktop, then hit → or / to see its contents. From there, you can select a sub-folder and hit → or / again to drill down further.