Microsoft support asked me to add this as a request, even though it is more of an issue that needs to be resolved.

Multiple users cannot open certain Microsoft Word files if they are in a synced OneDrive/SharePoint folder. They can be opened in Microsoft Online though.

There is only one way I could get the file to open and that is to open the OneDrive Sync Client/Settings/About tab and then UNCHECK "Use office applications to sync files that I open." Since we do not want to leave this unchecked, as you can imagine, I have come up with a temporary work around...

...Open the file in Word Online, download the file, and move the file from my downloads folder to the desired OneDrive synced location and then delete the corrupted file.

As you can imagine from the description above, we have no way of knowing how many files are affected.

Lastly, not only does this issue affect multiple users within our organization, I had someone from my old job contact me to see if I could help him with the same issue, so that means this is an issue that is affecting two completely unrelated tenants.

The issue started for us yesterday the 17th of November, 2020.

Note: all of the files that are affected are Word 97-2003 .doc files. But not all of those files are affected.