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We have provided external access to sharepoint online site to vendors via their work email id's associated with micorosoft account. it worked fine for few days but started throwing errors with message "user not found in directory". pls see the below screenshot of the user details from user profiles. initially they have properly accepted the invite and able to access the site

user still exists in the user profiles list and under manger access requests section I have followed all the steps for enabling external sharing both at admin level and site level. I dont see this happening when i test the external access with my own hotmail account.

pls see the below screen shot from office 365 admin console specific to the site:

office 365 admin - Manage external users for this site

Pls share your thoughts.

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After rigorous trail and error steps, what i noticed was the main issue is with the stored passwords (though correct) and cookies are the root cause of the authentication and vague error messages.

SharePoint online when tried to login with external user email id's behaves very strangely by giving exception messages such as "user not found in the directory" and "authentication could not be completed". so to solve this problem clear all the stored passwords and browser cache, also properly logoff from the web site after successful sign-in.

Another point that i noticed was this doesn't happen with Microsoft accounts such as Hotmail and so on as logon accounts. but when you try to use your own work email assigned with Microsoft account and you have ADFS configured with on-prem AD then users should be careful while trying to login in the web site.

We have also logged a ticket with Microsoft but there is no reply from them and its only under investigation.

I really hope this note will help the people who are struggling with annoying behavior of SharePoint online external access.

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