Music app's library is only using Cloud/Match library and not my local library

Last week, I was having some weird slowing on my primary computer/iMac so I tried to boot in safe mode by holding done the option button while it booted/loaded. I let the button go before it completely rebooted and now my system is really, really strange. I checked, and I am not in safe mode:

For instance, my Music app's library is now purely based on Apple Music/Itunes Match.

I use my iMac to backup my phone and I use it to store all 40,000 tracks I have, which include a lot of non-Apple Music available tracks. Because I like listening to my own tracks/playlists in other locations like my office, I use iTunes Match so I could easily play anything I setup at home in other locations, including my iphone. I also have Apple Music as my wife and son like it (I have a Apple One Premium plan).

But now, my home iMac seems all messed up after the failed safe mode. The files are still on the computer, but Music only wants to look at the files on Cloud and not use my local files. if I log out (Account>Sign Out), all my music disappears from all the playlists. I checked my hard drive, and all the music is still there, in the same location since 2008 and the same location

You can see that everything has an "Available for download" icon next to it.

If I look in the File tab of the song's information, it no longer has a longer location but now says "cloud":

I am not excited about this at all. How can I return music to using the original, locally saved files as the library?

Thanks