Got this reply from OneDrive support.
TLDR, nothing can be done from my side except waiting for them to fix it. Use the web app in the meantime.
Thank you for contacting OneDrive support. Hope you are doing well!
Upon reading your response, it seems you are unable to sync shared folders to your computer shared by someone. They appear as internet shortcut on your computer, and can be accessed online in web browser. Please do correct us in case we are wrong.
If so, we regret to inform you that the problem you are experiencing is part of an ongoing issue that our technical team is currently working on. We understand the inconvenience this may cause and appreciate your patience as we strive to resolve this matter.
Unfortunately, at this time, we do not have a specific date for when the fix will be released. Our team is working diligently to address this issue.
In the meantime, we have identified a workaround that may help you continue your work without significant disruption. You can access the folder online, which should allow you to bypass the issue until a permanent fix is implemented. The .url internet shortcuts will automatically convert back to a folder when the issue is resolved.
Reference link: https://support.microsoft.com/office/add-and-sync-shared-folders-to-onedrive-for-home-8a63cd47-1526-4cd8-bd09-ee3f9bfc1504
We apologize for any inconvenience this may cause and appreciate your understanding and patience during this time.
As this is an ongoing issue, we are closing the case now. Please feel free to generate a new ticket via this link: https://onedrive.live.com/?action=feedback if you have any more concern/query related to OneDrive.