It seems there are 2 types of personal Microsoft accounts.
SPO and normal account (Production acc).
When we share a folder from SPO account to a normal account and add it to our normal account's 1drive, it displays as internet shortcut.
You can check the same by right-clicking on internet shortcut of shared folder >Properties.
you will see, "LinkifiedSPOShortcut-Prod&CallerId=Sync-Windows" in the shortcut.
Now how to find whether your Microsoft account is an SPO or not?
Log onto OneDrive website in a browser, trying sharing a file/folder to anybody, the UI windows will be modern one when compared to Prod acc (normal acc)
Normal acc share windows below:
SPO acc share windows below:
Microsoft acknowledged it: https://support.microsoft.com/en-us/office/add-and-sync-shared-folders-to-onedrive-for-home-8a63cd47-1526-4cd8-bd09-ee3f9bfc1504
I am assuming it will be fixed when all Prod/normal accounts are migrated to SPO.