Mac book air Mac OS Hard drive update

Try this:

Install El Capitan or Later from Scratch

If possible, back up your files.

1. Restart the computer. Immediately, at or before the chime, hold down the Command and R keys until the Apple logo and progress bar appear. Wait until the Utility Menu appears.
2. Select Disk Utility from the Utility Menu and click on the Continue button.
3. When Disk Utility loads select the target drive (out-dented entry w/type and size info) from the Device list.
4. Click on the Erase button in Disk Utility's toolbar. A panel will drop down.
5. Set the partition scheme to GUID.
6. Set the Format type to APFS (SSDs only) or Mac OS Extended (Journaled.)
7. Click on the Apply button, then wait for the Done button to activate and click on it.
8. Quit Disk Utility and return to the Utility Menu.
9. Select Install OS X and click on the Continue button.

Look at this last image. I believe you want to install macOS onto the internal SSD - Apple SSD SM0128... Let's go with that assumption. Here are my instructions:

1. Restart the computer. Immediately, at or before the chime, hold down the Command and R keys until the Apple logo and progress bar appear. Wait until the Utility Menu appears.
2. Select Disk Utility from the Utility Menu and click on the Continue button.
3. When Disk Utility loads select the target drive - Apple SSD SM0128... - entry from the Device list.
4. Click on the Erase button in Disk Utility's toolbar. A panel will drop down.
5. Set the partition scheme to GUID.
6. Set the Format type to APFS (SSDs only) or Mac OS Extended (Journaled.)
7. Click on the Apply button, then wait for the Done button to activate and click on it.
8. Quit Disk Utility and return to the Utility Menu.
9. Select Install OS X and click on the Continue button.

Now, does this clarify what you want to do? You will only be installing on the internal SSD. I assume that you were able to boot the computer from the Recovery HD (Command-R at startup - Step 1.)