Are you trying to mount a directory onto a file (or vice-versa)? Check if the specified host path exists - Docker fro Windows WSL

Question

I am running Docker for Windows WSL. I have the following docker compose file:

version: '3'
services:

  db:
    image: "postgres:9.6-alpine"
    container_name: db
    volumes:
      - data:/var/lib/postgresql/data
    ports:
      - 5432:5432
    environment:
      - POSTGRES_DB=read_bytes
      - POSTGRES_USER=readbytes_admin
      - POSTGRES_PASSWORD=mypass

  proxy:
    build: ./proxy
    container_name: proxy
    ports:
    - 80:80
    depends_on:
    - api
    volumes:
    - ./proxy/default.conf:/etc/nginx/conf.d/default.conf
    links:
    - api

  api:
    build: ./api
    container_name: api
    environment:
      - DB_SERVER=db
      - POSTGRES_DB=read_bytes
      - POSTGRES_USER=readbytes_admin
      - POSTGRES_PASSWORD=mypass
      - OAUTH_CLIENT_ID=YOUR_GOOGLE_OAUTH_CLIENT_ID
    ports:
      - 8081:8080
    links:
      - db
    depends_on:
    - db
    command: sh -c "mvn clean flyway:migrate -Dflyway.configFiles=flywayConfig.properties && java -jar api.jar"

volumes:
  data:

and i get the error:

ERROR: for proxy  Cannot start service proxy: OCI runtime create failed: container_linux.go:380: starting container process caused: process_linux.go:545: container init caused: rootfs_linux.go:76: mounting "/run/desktop/mnt/host/d/Data_SD/aaa/bbb/ccc/DataEncrypt API Traffic/fff/ggg/proxy/default.conf" to rootfs at "/etc/nginx/conf.d/default.conf" caused: mount through procfd: not a directory: unknown: Are you trying to mount a directory onto a file (or vice-versa)? Check if the specified host path exists and is the expected type

I am running docker-compose from D: drive within the SD-card. I read similar issues but did not help.

any hint?