A group of Microsoft Products and technologies used for sharing and managing content, knowledge, and applications.
Dear @RahulK,
Based on how modern sharing and permissions work in SharePoint Online, what you are observing is expected behavior under certain conditions.
For better assist, please kindly let me know some information:
- Could you please confirm whether this SharePoint site is a Team site or a communication site?
- Could you please confirm how permissions were granted to those users?
- Please also let me know whether the folder has unique permissions or is inheriting permissions from the site.
Next, please go to Manage access > Advanced permission settings, and use Check permissions to verify what permissions user D currently has on that folder.
Note: Please note that our initial response does not always resolve the issue immediately. However, with your help and more detailed information, we can work together to find a solution.
Your understanding and co-operation are highly appreciated. Please feel free to reply below if you have any update or further concern.
I am looking forward to your response!