Distracted: your mind is working/thinking, but not about the right thing. It is a problem of attention, generally. Confused: your mind isn't working right/isn't thinking about something correctly. It's a form of misunderstanding something. You can be distracted by thoughts, worries, fears, or physical things in the environment like noises, sights, sounds, vibration, a flashing light, etc. We're often distracted by more appealing things; i.e. wasting time on social media instead of working. Confusion, in some cases, can be medical problem such as with dementia, alzheimers, or some kind of other impairment. Or, it can just result from misunderstanding something, making a false assumption, having incomplete info, etc.

Being "confused" is your state of mind. Being "distracted" is one possible reason for being confused. Being "confused" means you can't think clearly... for any reason. When I wake up in the morning, I am confused for a few minutes. You are "distracted" when you can't think clearly about a task because something else is urgently demanding attention. Suppose I am trying to play golf and aim my shot perfectly. (I don't play golf! But let's pretend). Suppose there is suddenly a loud noise. I am "distracted" by the loud noise. When I wake up in the morning, for a few minutes I am "confused," but not "distracted." Nothing is trying to get my attention. It just takes me a second to figure out where I am and what I am doing.

You may not be working at all. Distracted can also mean something has captured your attention suddenly, taking your focus off whatever you were attending to. In either case, it involves the mind being diverted elewhere.