Hi, johned0
Thank you for using Microsoft products and publishing them in the community.
This appears to be a known issue currently affecting OneDrive shared folders. Users from different regions have reported the same issue beginning approximately June 2024. We've summarized the main points of our current situation in this issue, you can review them at your convenience:
1-> Impact Summary:
Many customers worldwide have reported that their OneDrive shared folders have become inaccessible as regular file folders in File Explorer and instead appear as internet shortcuts. The reported issues include:
- Shared Folder Visibility - Users can see shared folders in a web browser, but these folders appear as link files (.URL) in File Explorer, which open the OneDrive website rather than displaying the folder contents.
- Synchronization Issues - Shared folders are not syncing properly with OneDrive on the desktop. Attempts to add these folders to "My Files" result in creating internet shortcuts instead of actual folders.
- Access and Sync Problems - Users are unable to sync shared folders with their local devices, resulting in workflow disruptions and inability to access files offline.
2-> Latest Update:
This issue may be caused by an internal error that affects data synchronization and processing within the OneDrive service. Microsoft has confirmed this issue and stated in the Microsoft Support article:
Add and sync shared folders to OneDrive for home - Microsoft Support (Only English articles are currently being updated)

The Microsoft development team is aware of this issue and Internet shortcuts will gradually be restored to the original files in future updates. Thank you for your patience.
We fully understand the inconvenience and disruption caused by this issue. Our team is actively working on this issue and working to fix it as soon as possible. We are still collecting and monitoring many cases and thread behaviors, so we can always follow up on any new updates or fixes that appear.
If you have any questions or need more help, please let us know.
Sincerely,
Aiden.C - MSFT |Microsoft Community Support Specialist