Here is the guidance the Outlook In App Team is using. Sharing this in case it might help.
This customer may be having an issues with blocking or unblocking email forwarding in M365, for tenants the related Message Center notification is: MC223357
To enable or disable email forwarding for a specific mailbox, see https://docs.microsoft.com/en-us/microsoft-365/admin/email/configure-email-forwarding?view=o365-worldwide
If you are getting the following error: “550 5.7.520 Access denied, Your organization does not allow external forwarding”, please make sure the policy is configured to enable External Auto-forward - https://docs.microsoft.com/en-us/microsoft-365/security/office-365-security/external-email-forwarding?view=o365-worldwide
On the tenant level, control of external forwarding is done using the outbound spam policy. You can check the outbound spam filter policy from Security and Compliance Center or by using the Get-HostedOutboundSpamFilterPolicy command.
Note: It is recommended to keep the External Autoforward disabled on your default outbound spam filter policy and enable it only for the users who need external forwarding by creating a custom policy for those users. You can read more in https://docs.microsoft.com/en-us/microsoft-365/security/office-365-security/configure-the-outbound-spam-policy?view=o365-worldwide