Outlook + distribution group error

Hi all,

one of my users has issues with "Distribution Groups" in Outlook.

Description of error:

"changes to the public group membership cannot be saved. you do not have sufficient permissions to perform this operation on this object" (see attached picture)

Short summary:

1.) user who wants to modify DL is an on-prem user synced to the cloud;

2.) DL she is trying to modify is cloud-only;

3.) she is the owner of the DL she is trying to modify;

4.) user is having Outlook 2016 with E3 license on her laptop.

Questions I've asked to user:

My questions to user over Teams:
1.) Is this the 1st time this kind of issue happened to you?
2.) when did issue start to happen?
3.) is issue showing up only in desktop version or owa also?
4.) were you able to configure DL previously without any issues?

Her answers:

1) yes, but I think I had a similar issue on another DL this week which got resolved by itself
2) I did not try to remove any user for some weeks (4-6 weeks maybe) but I was able to add someone about 3 weeks ago. I didn't try to edit the DL since
3) it is on the desktop version - I will try in owa
4) I never had any issue and I've been the owner of that dl for years now!

Some of my tests:

1.) I've added myself as the owner of DL:

result: users who reported issue & I are able to modify (add/remove) DL from Outlook on the web.

For the Outlook desktop version, issue is still showing for both of us.

2.) added me through "EXO admin center -> admin roles (one of the roles is Distribution Group role) -> issue still shows in Outlook (desktop);

3.) followed article, potential causes/solutions on https://docs.microsoft.com/en-us/outlook/troubleshoot/contacts/cannot-manage-distribution-group-exchange-mailbox

Case 4: PS Cmdlet hasn't shown any issues

My questions:

1.) what is potential cause of this issue?

2.) what else should I check in this case?

3.) what is solution? I mean it works in OWA, but not in desktop version.

I want to know why.