Hi @Andrew Burke ,
sorry to reply you so late. I did a lot of testing and reproduced your problem. This is strange. When I check Allow only users in specific security groups to share externally, it becomes only available to users within the organization. When I uncheck it, the sharing settings work normally. I also can't figure out why the problem occurs.
To help you better, we recommend you directly create a support ticket from Microsoft 365 Admin Center > Support > New service request.
The support team over there has the correct escalation channel, they can involve more resource and investigate the behavior from back end as fast as possible. They also can check the behavior on your end remotely. You can select online support or phone support to have a live chat with the support engineers. This is the most efficient way for handling this thread as per the situation. I am sure that our Expert Engineers from that side can address this issue effectively and accurately.
Hope it get resolved soon.
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