Please understand that our forum is a public platform, and we will modify your question to cover your organization domain name in the description. Please notice to hide these personal or organization information next time you post error or some information to protect personal data.
Welcome to the Microsoft Q&A forum.
Thank you for contacting us. Based on the environment I have tested, I would like to provide you with the following information:
Please check the following settings:
Step 1: Go to https://admin.microsoft.com
Step 2: Click Users → Guest users → Invite user and fill in the required information
Step 3: Click Settings → Org settings → Services → Microsoft Loop, then check the box Allow access to workspace in Microsoft Loop apps
Step 4: Click Security & Privacy → Sharing, check the box Let users add new guests to the organization, then click Change the external sharing setting for SharePoint and select Anyone
Step 5: Go to SharePoint Admin Center → Policy → Sharing
The following notification will be displayed:
If you have any updates regarding the issue or you have any other questions, please feel free to share them with me, and I will assist you.
If the answer is helpful, please click "Accept Answer" and kindly upvote it. If you have extra questions about this answer, please click "Comment".
Note: Please follow the steps in our documentation to enable e-mail notifications if you want to receive the related email notification for this thread.