That did'nt work, Issue type User not in directory - SharePoint external access error

You have granted permissions to an external user to your SharePoint site, list, document library or document, but they receive an error stating that the account can't be found in the tenant.sharepoint.com directory.

That didn't work
We're sorry but [EXTERNAL USER ACCOUNT] can't be found in the [company.sharepoint.com] directory. Please try again later, while we try to automatically fix this for you.

The message provides some additional information -

• Correlation ID - Which is of not much help in SharePoint Online
• Date and Time - Time stamp of error
• URL - SharePoint link which the external user could not access
• User - Email account of the external user
• Issue Type - User not in directory

The last information "Issue type" is helpful, which clearly indicates that the user is not found in your Azure Active Directory /SharePoint User Profile or may not have permissions to the access the SharePoint link. All external users are added to your Azure AD in format [external-email]#EXT#@tenant.onmicrosoft.com.

Common Causes of this error

• External account is not permitted to access the link, access is not granted.
• (MOST COMMON) External user is using a different account to access the link, which does not have access. The account should be same which received the email invitation.
• External user has not accepted the invitation and directly accessing the link.

FIX - go in sequence to narrow down the problem

• First things first, double check that external access is enabled for your Tenant and SharePoint site. There is no harm in rechecking.
• Go to Site Settings --> Users and Permissions --> Access Requests --> EXTERNAL USER INVITATIONS / HISTORY, the status in history should show 'Accepted by USER'. If it shows pending, ask user to click the link from email invitation.
• Re-assign permissions to the external account. This will send a fresh email invitation to the external user, ask them to click the invitation link received in email.
• Ensure that the account used is the same to which access was given and email invitation was received.
• Using Chrome Incognito or IE/Edge InPrivate always helps. There will be conflict when accessing 2 Office 365 accounts in the same browser window, this will even rule out cache/cookie problems. Ask the external user to open a private browser session and try accessing.
• Select 'Organizational Account' if user has an Office 365 account, select 'Microsoft Account' for any other account.
• Remove the user (not permissions, remove the user entry completely) from SharePoint by going to 'All users' list by appending _layouts/15/people.aspx/membershipGroupId=0 to your site.
• Remove user from Office 365 portal by going to Users --> Active Users.

You can use similar approach for troubleshooting OneDrive external access issues.