Recently i tried once more to reproduce setting up Bannerlord Online from scratch and i was unsuccessful. However i was still able to start and play Bannerlord Online using my old prefix and terminal command:
STEAM_COMPAT_DATA_PATH=/path/to/SteamLibrary/steamapps/compatdata/261550 proton -e 261550 BannerlordOnline.exe
Here is the link to my working prefix:
This file has been shared with you on pixeldrain
pixeldrain.com
Delete your 261550 prefix and replace it with mine
BannerlordOnline.exe is in steamuser/AppData/Local/Programs/Bannerlord Online
Hopefully this works for others