Struggling with Conditional Access MFA Impacting OneDrive Sharing – Help Needed!

Hey folks, I'm in a bit of a bind and could use some sanity-checking on a recent issue we've been facing. For context, we've had Multi-Factor Authentication (MFA) for guest users enforced via Conditional Access since we started using it, and it has always worked smoothly. Guests would get a link to our OneDrive files, receive an OTP in their email, authenticate, and then access the files without a hitch. However, just this week, external users started encountering the error AADSTS90072 when trying to access links we've shared. The error message indicates that the selected user account doesn't exist in our tenant and that it needs to be added as an external user first. Sometimes retrying works, likely due to a cached OTP session, but none of the guest accounts are appearing in Entra ID.

Here's where things get tricky: if I go through the 'Manage Access' section and specifically invite the external users, everything works perfectly—their accounts get created, MFA kicks in, and they can access the content. But this is a significant shift from the straightforward sharing process that our users are accustomed to. I'm now being told by Microsoft Support to manually invite each guest, which is obviously not a scalable solution. I'm trying to keep the security measures in place without complicating the user experience.

So, I wanted to ask if anyone else is running into this issue with external sharing and Conditional Access MFA. Are there any better workarounds than either excluding OneDrive from MFA entirely or forcing everyone to invite guests ahead of time? It seems like this could be a change on Microsoft's end, and I'd love to hear how others are handling it.