This issue is new to me, but this post is here from nearly a year ago. Surely a solution has been worked out. Please let me know. This issue is more than an inconvenience and is effecting my business.
Option 1.
There is no way for you to "fix" this issue which is caused by Microsoft migrating shares from V1 to V2 (without any warning or notification).
OneDrive works fine V1 to V1 and V2 to V2, but not V1 to V2.
The official reply is wait and it will just resolve itself. The catch is, we have no idea when it will be fixed, everyone times appear to be different, so that is no guide, We have no idea how much longer we might have to wait and there is no process to get your files prioritised. New people are being affected every day, so if you only got affected this week, folders shared to you and all the files within them will be removed and replaced by a web url.
You are wasting your time adding/remove/changing anything and likely just creating extra work for yourself.
If you can get by for the next few months ish, then you would be best to just sit back and wait. Microsoft state, one day, it will all just fix itself, i.e. all the urls will disappear and all your folders and files will be restored and many people here have said that is exactly what happened.
Option 2.
If you can't wait months for this to be fixed and if you have a Microsoft 365 Family Subscription and you have a spare family membership, there is a workaround.
First you need to know whether it is you or the person that shared the folder that is running V1. The V1 user can create a new Microsoft account (it will get created as a V2 account). Then have the owner create new shares to the new user account and it will work just fine.
If the Folder Owner is the V1 user, that gets a bit trickier, because you can't access two different personal OneDrive accounts at the same time. First the V1 user would need to copy all the files to a location accessible by both Microsoft accounts (could be a new folder you create on your computer or a usb/NAS (depending how many files you have and how big they are).
Then the V1 user copies all their files to the temp storage.
Then sign out of the V1 account and sign into the V2 account,
Then copy all the files from the temp storage to the V2 account.
You are now back up and running.
I have been waiting 7 weeks and I am both the owner and the V1 users. So I recently decided on Option 2. I wanted to keep the same name (mine), but with a different email address, this was getting messy and confusing, so what I did is create a new windows account on my laptop, then created the new Microsoft account. I have a NAS, so I copied 200GB to the NAS and from the NAS back to the new account.
Creating a new windows account meant I pretty much had to reinstall, reconfigure everything, pretty much like starting with a new computer. This is a lot of work, it has taken me a few days, but I just could not wait any longer for my V1 account to get migrated and it still has not been migrated, so I'm ahead at this point.