Trouble Upgrading

Before you read, yes I am new to this. This is my first upgrade ever.....

I understand this is more than likely a user error but I have asked other subs and have been unsuccessful. I am upgrading my 2017 MacBook Pro from 128G to 1TB NVMe M.2 2242 SSD. I am not sure if I have formatted the external hard drive wrong or not when I made the time machine but I have iCloud so I just went ahead without the time machine and used OS High Sierra. I am trying to update to Big Sur and I am getting an error that says "You may not install to this volume because it is currently being encrypted" when I select the 1TB SSD. I really don't know what else to do except insert the original 128GB back in and restart the whole process. Any suggestions? I am thinking about restarting and putting the original 128GB back in and starting fresh. Good idea or not? I can't really find too much information on how to do this the "right" way.