According to your description, my understanding is that you can create a blank notebook to SharePoint library via the following steps:
- Open OneNote 2016.
- Click File>select New.
- Select SharePoint site>then navigate to the library.
- Type the notebook name to create.
Besides, I want to collect the following information for further analysis:
- The version of OneNote. (As you are using OneNote 2016, you can refer to the following steps: click File>select Account)
- Check if all libraries meet the issue.
- The screenshot of error message.
- Can you create a notebook via SharePoint online? (Access to the library on web>select New>click Notebook)
Thanks for your reply and questions, Qing.
Yes, I can create a blank notebook to SharePoint library following your steps.
Here are the steps we use to create a new notebook from a Template:
- Click the template file to open.
- Retitle the template Name.
- Select the Path in SharePoint to create the notebook.
- Click the Create button.
Again, I want you to know that the error occurs with multiple different templates we use and again it doesn't matter which library.
Here is the other information you requested for further analysis:
- OneNote Version 1906 (Build 11727.20244 Click-to-Run) Monthly Channel (Targeted).
Plus the problem affects four individuals in my organization tasked with creating new notebooks from templates. Doesn't matter the type of computer and they are not on the Monthly Targeted Channel.
- I have recreated the issue on multiple libraries in two different tenants (Business Premium and an E5 Plans).
- Here are sync errors for two notebooks syncing to two different libraries in two different tenants. The first error message was received when I closed the notebook and tried opening from SharePoint. The other is the error I receive when I try to create
the new notebook from a template. Note: Same Error code.

- Yes, I can create a new notebook from SharePoint Online, create multiple tabs/pages, and have it successfully Open in OneNote.
Here are two other scenarios that I have tested:
- I can create a new notebook from a template (.onepkg) on my desktop. When I select Properties, I can Change Location and select the library in SharePoint and it will successfully sync the notebook.
- If I attempt to create a new OneNote from a template in OneDrive, I receive the same error as I do SharePoint.

So you can see Qing. That this is a general failure of something that has changed/broken in the past week or so. Using OneNote 2016 to directly provision the files necessary to create a new notebook in SharePoint or OneDrive fails when opening a Microsoft
OneNote Single File Package (.onepkg) on the desktop.
I hope I have answered everything and giving you the information you need. Please let me know if I can be of further assistance to find a solution. Peace.