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

That's indeed the problem. Looking at the recent grow in notifications on these topics they recently upgrade lots of accounts. Let's hope all will be upgraded soon. You can distinguish the Onedrive version also on your start page.
Old (New and Upload):

New (Create and Upload):

After months of having this problem, I can give you some pointers.

It seems that there are two versions of OneDrive Personal. The folders on the PC only work well between accounts with the same version.

Without warning, some accounts change versions, so from one day to the next they can no longer use that folder and it becomes a simple link.

On the OneDrive website, in options you can identify which version of OneDrive that account has. There are many differences, but I am attaching a screenshot to quickly identify if you are on the new or old version.

Microsoft would have to migrate everyone to the same version, and it would have to be a process of a few days, but it has been having this problem for 9 months now.

We want a solution now!!

I have fixed this for 1000 of people and the only time it’s failed is when you try and mix the business version of OneDrive SharePoint and the personal version of OneDrive you cannot share folders between these two different OneDrive systems and they are not compatible together. Both users have to be on the same version And they both have to be a paid account.

The other thing that can mess it up is not removing the folder and its contents out of the OneDrive. Moving it within the OneDrive does not fix it. You must completely take it out of the OneDrive. I placed everything into a working directory at the root of the sea Drive and move everything in there then I make sure the share is removed off the other computer, not moved around completely deleted, and it should not be showing up online in the shared folder list.

You must create a new folder in the OneDrive that’s being shared. Wait till you can see it on the web version of OneDrive and then set your permissions set read right on the folder by itself. In about 10 minutes, you should be able to see this folder on the second computer. Click download to folder reboot the computer at this point, and it will come And it be successful to put things in. At this point on the sharing computer, you can move into the new folder. Everything you wanted to share do not overwrite the folder. Just move the contents into it and these will slowly show up on the second computer over the next few hours. I personally reboot both machines at each step to make sure it takes so by the time I get to this point, I’ve rebooted each machine three or four times making sure each step works. If you ever turn the route directory that you’re sharing to read, only the share will disappear And turn into a shortcut. It is impossible to fix by changing it back. You must follow the same procedure from the start to get it working again and remember do the shares in the web version not on the local machine.

Apart from the fact, that it doesn't work here (personal version), it is a crazily cumbersome task to just share a f'in folder with another account. Who made up this strange routine? This is the way, the biggest software company in the world offers their customers? Wow...

Same problem has started reappearing as all my shared folder has now turned into shortcuts again **cries**

At this point, I think they simply gave up on solving it or it was simply planned!
The second option seems more obvious to me... force us to sign to an enterprise plan... more money more better, right?