We have the same problem. I cannot follow all the talk of Group Policy. I discovered there is a file called "global.ini" in "%localappdata%\Microsoft\OneDrive\settings\Business1". It is a text file which you edit thru Notepad. Quit OneDrive, edit that file and look out for
CoAuthEnabledUserSetting = true
Set the flag to "false". Restart OneDrive. You should now see the missing File Collaboration toggle under Settings/Advanced.