Dear Tatwir Tatwir,
Thank you for reaching out to Microsoft Community Support. We appreciate you sharing your concerns regarding Microsoft Forms.
In response to your inquiry about using the "File Upload" feature in Microsoft Forms with external users, we would like to provide you with the following clarification:
Unfortunately, this feature is currently not available for external users, primarily due to data security and privacy policies, as uploaded files are stored directly in your organization's OneDrive for Business or SharePoint. As a result, there is no configuration option in the Admin Center to override this limitation.
We recommend the following workaround:
You can continue to use Microsoft Forms to collect information and include a shared OneDrive or SharePoint folder link in the form where external users can upload their files. This method is widely adopted as an effective alternative to overcome this limitation.
At Microsoft Community, we are always here to provide you with the support and information you need for any Office 365-related inquiries.
Should you have any further concerns or suggestions for improvements, we encourage you to share your valuable feedback on the Microsoft Feedback Portal.
I hope the information I provided earlier was helpful to you. If you have any additional details or updates regarding this issue, feel free to share. Your feedback is greatly appreciated. If you found my answer helpful, marking it as an answer would be helpful for others facing similar situations.
Best regards,
Dustin-TP-MSFT | Microsoft Community Support Specialist