Hi @Amy Ng,
I tested in my lab but not seemed able to reproduce this issue.
If you setup the OOF via Outlook on the web instead, will it work for you?
If it works, to me the possible cause may be some network settings blocked the request to modify the OOF settings.
I will suggest switching to another network to see if the issue persist.
Besides, if the sync issue only occurs on Teams, please make sure that you logged in Teams after you enabled OOF in Outlook (it may require Teams to be opened for Teams to update the OOF setting).
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