Hi there,

yes - after a few attemps and try and error, we've found a solution.

Following steps were needed;
- check and clean-up DNS-settings on your domain (i think you already did and it's fine)
- change Teams-mode to 'TeamsOnly' (i think you already did and it's fine)

But after that, some users still had the same issue.

Then the solution was as follows:
- deallocate and then allocate again the E3 license on the affected user(s) (it seems for me, the SIP-registration was new made during this step)
- additionaly we had to change the "TeamsUpdgrade" mode on the (existing) affected users to 'TeamsOnly' manually with PowerShell (that means, turning off the islands mode generally had no effect to existing users maybe)

Use Get-CsTeamsUpgradePolicy and Grant-CsTeamsUpgradePolicy to check and adapt.
https://docs.microsoft.com/en-us/powershell/module/skype/grant-csteamsupgradepolicy?view=skype-ps

After all that... everything worked as expected.

Further helpful informations;
https://technut.se/error-upgrading-organization-to-teamsonly/
https://docs.microsoft.com/en-us/MicrosoftTeams/teams-only-mode-considerations

Let me know, if this also worked for you...
www.000webhost.com