The timing you mentioned about a week ago lines up with Microsoft pushing some backend changes to how SharePoint knowledge retrieval works in Copilot Studio. You didn't change anything, but they did. That's almost certainly what flipped the switch here.
The reason Sonnet and Opus work fine makes total sense too. Those models handle citation grounding differently. The tradeoff is obviously the speed issue, which is a real problem for an HR assistant where people expect quick answers.
Here's what I'd actually do:
First, go check your "Work IQ" setting in the agent it's a SharePoint retrieval feature that requires authentication to be set to "Authenticate with Microsoft." If something changed there, it could be silently breaking citation resolution.
Second, double-check how your SharePoint URL is entered as a knowledge source. It sounds minor, but Microsoft changed some things around how those URLs get resolved, and a URL that worked before might not resolve the same way now.
Third and this is just to stop the bleeding for your users you can suppress the citations entirely with a simple formula in your message node. The broken links are arguably worse than no links at all, so hiding them while you sort this out is a reasonable call.
But honestly, the most important thing is to open a support ticket with Microsoft. This isn't something you can fully fix on your side. The citation generation pipeline broke on their end, and you need them to look at it. Log it through the Power Platform admin center. Also worth checking your Microsoft 365 service health dashboard sometimes these regressions show up there quietly.
You're not going crazy and you didn't break anything. This is on Microsoft.
