I had a user request for a new SPO site to enable external sharing. I had previously tested this so we could be as secure as possible.
1. Created a new security group and allowed only members of that group to share externally.
2. Change Org-wide SPO settings to allow external sharing to new and existing users.
3. Created a test site and successfully shared with External user with read-only permission.
However, when another member of AD (part of group in step 1 created a new site) and tried to share externally it says external sharing not allowed. I have checked settings via PS but everything seems as expected. We are adding external users via Outlook and as we're unable to do so directly from the SPO site.