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But, your picture showed a TM disk, judging by the icon, so that's not just another disk, it's one used for a Time Machine backup.
Are you sure you are selecting your destination disk (the one that you want to have as a boot drive, with your newly installed system)
A tip to help you make sure that the drive you want to erase is the correct disk: Change the name of the correct disk before you try your next erase. I usually use a ridiculous name, like "malfactorActor", or something you can choose on your own as a really stupid name for a storage or boot drive.
You're erasing it anyway, so the name would immediately change to something else during the erase ("Untitled", if you don't enter a new name yourself).
And, the correct drive would now be erased
 
Well, yes, I can see where you're coming from, the TM icon is there... But I did not try to install there (unless I did it by mistake, but I think not).

I managed to install Mojave in my 2nd partition, I was trying to make a clean Big Sur install with a bootable USB, and the Time Machine option came up. I clicked it and here we are.

Now I am trying to install Big Sur on top of it, to see what happens.
 
Hey guys, I solved it.

Basically I created a new partition on my external SDD, managed to reinstall my system with mojave using Time Machine. I then upgraded to Big Sur instead of Monterey, and now it's starting in under a minute. I won't worry about Monterey for now, I needed to install a couple new apps that would not install on Mojave, and with Big Sur they are up and running.

Thank you so much for all your help.
 
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