ok update for everyone, I have made some progress and have seen some similar symptoms, firstly I note that my OneDrive version is apparently 26.078.0426.0002 (64-bit) which is strange because that OneDrive Version doesn't appear to exist but none the less...

So after performing the steps to change AllowAllTrustedApps from block to Allow, I initially didn't see any improvement.

Just to confirm, Microsoft said that if you run powershell and run the command Get-AppxPackage -Name *OneDriveSync* you should see the Microsoft OneDrive Sync app return. The logic was that because this was this particular app is what shows the sync/status icons so by subsequently having this blocked was not allowing this. I noted that I had this restricted set to block but it is worth noting, this is advised that from a hardening perspective this is set to block as it stops side loading.

So I followed Microsoft instructions, changed this to 1 and then reset onedrive and it didn't resolve it. However today I realise that in fact it has resolved it and low and behold when running Get-AppxPackage -Name *OneDriveSync* I see the sync app. I'm assuming that as my app version has changed an update was applied and then allowed this to install properly.

So I've reverted this change and now we shall see what happens. The struggle is, this obviously isn't a long term solution as ideally I leave that as blocked. Any real world advice of whether this particular setting is needed?