Hi Jack! Thanks for your reply.
I have installed on the SSD external the 3rd party apps I use. And I have all of the MacOS apps in the /Applications/ folder.
I am able to quickly access files stored on the internal hard drive. So the internal hard drive works normally when the MacOS is booted from the SSD external, but the hard drive is very slow when I boot using the internal hard drive.
My SSD external is 1TB, which I have partitioned into a 100GB bootable MacOS, and a 900GB Time Machine partition the I use for Time Machine. When I back up using Time Machine, I back up the internal SATA hard drive. The reason I am doing it this way is when I take my iMac to the Genius Bar at the Apple store, they may want to wipe my hard drive clean and then install a fresh Big Sur. At the time, I would want them to restore from Time Machine. Having Time Machine backup on the SSD I can fit in my pocket is beneficial.
Incidentally, a total of 6 senior advisors from Apple Support have been involved in this setup. They have been on the phone and have screen shared when all this has been done.
The first senior adviser gave me three options:
#1 - Rollback to an earlier MacOS
#2 - Perform a clean install
#3 - Use an external solid state HD as a bootable drive.
#3 seemed to be the best option for me, and it has worked out well.
Btw, if I wanted to bypass the internal hard drive, I can simply use my other external HDD which I had previously copied all of my data files onto a week before. With two thunderbolt ports, I can use both external drives at the same time. I have actually done so as a test to know my options if the Genius Bar cannot resolve the issue. I plan to go there sometime after mid-May.
Again, thanks for your reply.