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At the very first place, I guess the environment variable placeholder {Env.Agent_KnowledgeBase} is not being resolved correctly in that mode. Can you please verify that the environment variable is correctly defined and accessible in the environment where the agent runs?
It seems like "Only when referenced by topics" mode, the platform expects a fully resolved, concrete URL (when the topic references the knowledge source). If the environment variable is not resolved at that point, it treats the URL as invalid, causing the error.
As a test, let's replace {Env.Agent_KnowledgeBase} with the actual SharePoint site URL in the knowledge source configuration and check if the error persists. If it works, this confirms the environment variable is not resolving in that mode (When referenced by topics').
References:
Add SharePoint as a knowledge source (specifically – "Use Variables as URLs" section).
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