Credit to Brian Jackett who let us know about this change.
The Office Dev Center released this post on July 29, 2016 that confirms they are disabling Sandboxed solutions that reference DLL's in our SharePoint Online service. In addition they're blocking the deployment of new such Sandboxed solutions.
We announced the deprecation of sandboxed solutions way back in 2014 but it will undoubtedly still affect some customers that have forgotten or neglected to update their solutions. There are several options available to users of the service.
- Move the solution to the SharePoint Add-In model or pure client-side code. This is the recommended, sustainable, long-term solution but will require recoding your solution in a different development model than your developers were used to so it will require some ramping.
- Remove assembly reference from your Sandbox solution. Many Sandboxed solutions don't use any ancillary DLL's but the Visual Studio template for Sandboxed solutions inserts a stub for such a reference. Remove the reference so that the solutions are purely declarative. Steps for this are detailed here.
- Dave Feldman has a blog post that details a way to remove the reference and assembly from a Sandbox solution without using Visual Studio. This is useful if you no longer have the code. It's definitely a hack but it has been shown to work as a last resort.