Thank you for answering my question!
I experience that if I link to a specific document in SharePoint to my Copilot Knowledge, I get this error:
Alternatively, I can't see any other options than creating a site and a document library for my single file to ensure that they are dynamically updated. This is what I want - another way to maintain my text files without them being dependent on me manually updating them in Copilot Studio every time there is a change in the documents.
Thank you in advance for your help!