I had the following response from the support team, but despite doing all of their suggested actions, I still have the problem so it is NOT fixed!
Thank you for reaching OneDrive support. Hope you are well!
We have read your concern and thank you for reporting this issue. We would like to inform you that this was an ongoing issue, and it was reported by other users as well. However, we just received an update from our concerned team and would like to inform you that the fix has been rolled out for the reported issue.
We request you check and confirm if you are still facing the same issue when accessing shared folders from OneDrive folder in file explorer.
If the issue persists, please try removing the shortcut and then adding the folder again. Please also check and make sure your OneDrive app and Windows is up to date.
To update the OneDrive app, click here: 24.091.0505.0002
Looking forward to your response. We wish you a great day!
I cant understand what is going on now. The OneDrive version that I have installed currently is 24.116.0609.002 (64bit) which is obviously a newer release than this one (and the ones that are available in OneDrive download pages) . It will not let me install unless I uninstall my current OneDrive and install this older version. I am almost sure that this will not resolve my issue but let me give it a try.
Edit : Tried and it did not work as he said. When I reinstalled the app the version that got installed was 24.116.0609.002 . Wonderful. No need to try it fellas.
It has nothing to do with the app i think. Or may be I'm wrong. The files that are shared with me on other accounts shows as Shared in OneDrive online. But the shortcuts are created for the ones that are shown as private . Same sharing permission, different outcomes. Hats off to MS developers.