I have been fighting with the same problem since the release of Monterey. Tonight I solved it.
I have a 2017 MacBook Air with a WD 500 Gb SSD drive. I was getting the S.M.A.R.T. errors as well. I read a number of posts that said a firmware update would resolve it, reinstall the original apple drive, install Monterey which would include the firmware update. Next reinstall your non apple SSD drive and you should be able to install Monterey. That did not work for me.
I did confirm it is related to the drive because I was able to reinstalled the original apple 128 Gb drive, reinstall Big Sur and then upgraded to Monterey. I repeated the process on the non apple SSD and I still had the same S.M.A.R.T. errors when I tried to upgrade from Big Sur to Monterey, so the firmware upgrade part of Monterey was not the solution.
Next using disk utility, I removed all partitions on the 500 gb drive, created a new partition, formatted in APFS format and went to install Big Sur, intending to try upgrading to Monterey on a fresh install of Big Sur. The firmware update must have happened, because now I was getting the same S.M.A.R.T error installing Big Sur.
Next came the solution:
- I reinstalled the 128 Gb drive in the MacBook with the working copy of Monterey.
- I placed the non apple SSD 500 Gb Drive in a USB enclosure I had purchased from amazon. (M.2 NVME SSD USB Enclosure Adapter)
- Connected the usb ssd hard drive enclosure to a USB port
- Downloaded SuperDuper!. (free cloning software and that will clone an active drive)
- Using my MacBook, I cloned the 128 Gb Apple Drive with fresh Monterey install onto the non apple 500 Gb drive
- Reinstalled the 500 Gb non apple ssd drive in the MacBook
- Booted perfectly