MBP disk lost user home folder after Catalina 10.15.2 update fail ... what now?

My MBP 15" mid 2014 froze during 10.15.2 update at 36 mins left and after 24hrs I rebooted the laptop hoping it would recover. It didn't.

Using various startup-key combo's I got to try safe mode etc to no avail. Apple hardware test indicated no errors, Recovery OS not pssible as I seem to lack 4Gb disk space for reinstalling Catalina. This is weird as I know I had 40Gb available before the update.

I reset SMC and PRAM/NVRAM after which it got worse and all I got since was Apple logo + chime and auto shutdown at approx 5% boot progress on the bar.

So I tried Transfer mode to check if I could recover some data but the laptop hard disk doesn't get recognized on my older Yosemite MBP.

Next step: create bootable external drive with Catalina and boot this way. Result: booting works fine and I can see/check the disk using disk utility. No problems are reported.

However in finder I noticed that the users folder only contains a 'shared' folder and not my own home folder as I expected. Apparently my disk still holds the data but is is no longer connected to my user account? Doing any type of action that involves checking the disk, freezes the app I'm using. Tried with Terminal and even checking 'about my mac' grinds the system to a halt.

I cannot find any articles online about this type of problem. Fixing a user account is always explained from perspective that one boots from the system itself, which i am not doing.

Is there any way to access my data and delete some large files so I can try to reinstall the os using recovery mode?

Thanks!!