My organization has been seeing this for almost a year now. My co-worker opened a ticket with Microsoft Support last Summer and they didn't find anything in the web browser logs that was causing this. This ticket went on for several months. Our tenant doesn't have any session timeouts configured in our Microsoft 365 tenant. We've done all the basic troubleshooting steps and nothing has fixed it. I even tried to check internally with other departments to confirm if there might be other policies causing this and confirmed we don't.
Funny enough, I checked our Service Health page today and saw EX1026017, mentioning "Affected users may receive the following error: "Need more information. To satisfy your organization's security policy, an additional step is required."
They state that the root cause is "An authentication misconfiguration on a portion of impacted infrastructure responsible for attaching Microsoft 365 data to email messages using the new Outlook for Windows is causing impact." While we haven't confirmed if the affected users are attaching files, most of them are reporting that this happens "when typing up an email." They get kicked out due to the message and the draft isn't saving.
Yes, while this does state "new" Outlook, I'm not convinced that it's just happening in the New Outlook, since both OWA and New Outlook are connecting directly to the Exchange Servers. The only difference I see between the two apps is that New Outlook is a Progressive Web App (correct me if I'm wrong). We have the new Outlook slider turned off for our users. Once this is reported as fixed by Microsoft, I'm curious if this will resolve the issues that everyone else is also reporting.