OneDrive backup job fails with "Download request retry timeout exceeded"

During a OneDrive backup, the following error may occur while downloading a OneNote file (.one):

Failed to backup item: %path%, Download request retry timeout exceeded.

This issue may occur on the following versions of Veeam Backup for Microsoft 365:

• v7 P20231218 (build 7.0.0.4551) and earlier
• v7a (build 7.1.0.1301)
• v7a P20231218 (build 7.1.0.1401)

This issue concerns the failure to back up a OneNote .one file on SharePoint. Initially, these problems were tied to changes made to the Microsoft 365 backend in late 2023. However, Microsoft resolved those issues by Q3 2024. Further occurrences of this problem are believed to stem from an excessive file version history for .one files, caused by OneNote files being stored in OneDrive rather than using the built-in OneNote notebook synchronization feature.

When using OneNote with OneDrive, compatibility issues can arise if users attempt to store notebooks directly through the OneDrive file system instead of using the built-in notebook synchronization features.

According to Microsoft's OneNote syncing best practices​​​​​​​:

• In general, OneNote notebooks should always be synced and moved by the OneNote application, and not by file based synchronization systems such as a client application (such as the OneDrive or DropBox local client) or offline folders.
• OneNote has built-in sync logic with OneDrive allowing it to synchronize only the changes, which is significantly more efficient than file synchronization mechanisms like the OneDrive Desktop app or DropBox as it knows about the file format and can sync only the changes.