hi Innovate-4415 my name is Pedro Blanco I am willing to help you with your problem.
You must configure external collaboration in SharePoint Online Administrator, not in the Azure AD Dashboard.
Solution :
- Open your admin center https://admin.microsoft.com/.
- in the admin panel menu select "Show All".
- in the menu select SharePoint
- in the SharePoint Online Menu Select "Policies">"Sharing"
- into Sharing Policies modified de external colaboration Permisions.
If your problem persists, it means that the SharePoint site policy as such is what is restricting you.
Please tell me if the solution has worked for you and mark it in your topic, otherwise I will continue here to help you with your problem.