Folders Shared with me are syncing as internet shortcut in OneDrive on Windows PC

So I've been investigating this issue today, and it's affecting both myself and clients.
Here's what I've found:

1. The accounts that have been "broken" actually seem to be on a different platform of onedrive (best way I can describe it), maybe newer. You can tell by the share box which looks like this on "newer" platform:

As compared to the older style which looks like this on "older" platform:

2. It seems that two OneDrive accounts that appear to be on different "platforms" are experiencing broken sharing and you can tell if they have different share boxes.
3. Accounts where this sharing box matches each other, and therefore appear to be on the same "platform" can share folders without a problem. For instance, shares from my wife's account are showing up as links, and her account shows the "old" share box. However another account that was "broken" also has the same sharing box as I do, and I can infact share folders between the accounts properly.
4. Creating a new account only solves this issue for a bit, because it seems the newly created account is created on the "old" platform and not the new one, but is randomly migrated at some point which breaks it again from sharing with the older style of account.

If you are having this issue, please check the shared from and shared to accounts, click on the share button for a folder, and see if the share boxes are different between the accounts. I only have limited accounts to test this from, so maybe more people can see if they are seeing the same thing as I am.

My Post is getting deleted dont know why. Can someone check wheter the issue occurs only when cross domain email IDs share folder like Gmail to Outlook/Live domain email IDs.

oh my god, but I have subscribed to it.

It is still not working after all the upgrade and everything

Now that I have been experiencing this error for a few days, I have checked your diagnosis with folders from other Microsoft accounts that were shared with me a long time ago, and have come to the same conclusion, which can be summarised as follows:

If the sharing OneDrive account and the OneDrive account adding the shared folder are both either equally 'old' or equally 'modern' platforms, the added folders will immediately appear in the receiving OneDrive account as folders embedded in the Windows Explorer application. However, if the platforms of the sharing and adding OneDrive accounts are different, i.e. one is 'old' and the other is 'modern', the added folders will appear correctly in the respective apps on iOS and Android and in the OneDrive web version, but not in Explorer on Windows (and I suspect not on MacOS either), where they will instead appear solely as a URL that can only be opened in a browser window.

However, as the folders shared by other OneDrive accounts and then added to My Documents are now displayed correctly in the web view, and this is also displayed correctly in the apps on iOS and Android, the error is probably not in the communication between the 'old' and 'modern' platforms themselves. Rather, it seems that the OneDrive app for Windows (and possibly the OneDrive app for MacOS) detects the platform type of the particular OneDrive account it is logged into and bases its further processing on it ('old' or 'modern') and is not compatible with the sharing syntax of folders of the other platform type. The lack of this ability to always work with both platform types, regardless of one's own platform type, is probably the reason for the malfunction.

I would like to go into more detail. I ran the above diagnostic on accounts that successfully shared folders with each other immediately after creation on all operating systems, including Explorer on Windows 10 Pro and Windows 11 Pro. The accounts I checked were also all created over ten years ago. In the meantime, the web sharing displays have been redesigned many times without any problems. So I'm guessing that a few years ago, or maybe just a few months ago, there must have been a different kind of change that, as your previous post answered here, did not just change the way the sharing functionality looked, but actually started to migrate some OneDrive accounts (or even the entire respective Microsoft accounts) to a structurally different platform. And since this all works for the OneDrive display on the web and in the respective OneDrive apps on iOS and Android, Microsoft seems to be aware of the problem and has implemented a solution that works. However, for the Windows OneDrive app (and possibly the MacOS one), no one at Microsoft seems to have bothered for months to achieve dual compatibility (i.e. simultaneous compatibility with both 'old' and 'modern' OneDrive platform types).

This gradual rather than simultaneous migration of OneDrive accounts seems to have been recognised as a problem with the sharing functionality and addressed on some platforms (web, iOS and Android apps). On the most productive platforms of all, Windows (and possibly MacOS), no attention is being paid to the relevant agents (e.g. the OneDrive app for Windows), and attempts are being made to turn a deaf ear and a blind eye to the problem, presumably hoping to wait until all accounts have been structurally migrated months or years later. For the lucky Microsoft365 subscribers, the whole thing has been garnished with a hefty price increase.