To be clear: traditionnally, the panels available on the Linux DEs have provided a notification area (that we call systray for “system tray”) for applications to display a status icon, show notifications and so on.
When Canonical introduced Unity, the developers added a new kind of status icons called indicators that don’t display in the systray but in a specific area. They’re more limited than a systray icon in some ways but have some advantages and are supposed to be part of a more robust design.
When an app supports both formats, it displays an indicator when possible or reverts on the systray when not.
Besides Unity, some DEs/panels have added the support for indicators. That’s the case of Ubuntu MATE but I’m not sure it’s the case on 16.04.
The difference is easy to spot on MATE (as the Dropbox indicator has a specific icon from the Ubuntu Mono theme which is used by Ubuntu MATE). If you see the “ugly” original icon, you have the systray version; if you see a “fancy” new icon that match the colors of the other indicators, you have the indicator version.
Anyway, I guess there’s been a misunderstanding, I thought you were trying to get the indicator working (as it was the point of the thread) but it looks like you have a working systray icon and you’re fine with that (again, it’s possible that the indicators are not supported in 16.04 anyway). Except that it doesn’t sync anymore, is that correct?
When you change files in your Dropbox dir (the one on your desktop), the systray icon doesn’t show a blue circle icon and switch to the green one with a checkmark when it’s finished? If it doesn’t, do the syncing still works, beyond the appearance of the icon? Does it display a working context menu?
What about the folders in your Dropbox one? do they have emblems showing their synced status?