I started another thread before I was pointed over to this topic about the problem I was having with my late model Intel Mac running Monterey 12.0.1, and I was able to confirm the problem is Monterey and not limited to the M1 architecture:
https://discussions.apple.com/thread/253412693
Here is the last post from that thread confirming the steps that I took to determine why the Monterey Mac was unable to get past the erasing step in disk utility of formatting the drive:
Update: I took it to Apple support and very helpful senior advisor looked over with a screen share and we verify that there was no specific finding in activity monitor or console logs that acknowledged or suggested any kind of hang process; we took it through Recovery Mode version of Disk Utility ("to get the OS out of the way") and had the same thing, where it get stopped at the erasing stage, even with setting it up without encryption.
So I fired up the 2012 Catalina Mac, and it happily formatted the drive to the point where it was mounting in two minutes or less with macOS journaled or AFPS options. Then I took the formatted drive with AFPS, not encrypted, plugged it into the 2020 MacBook Pro running Monterey 12.0.1, and it happily mounted the drive and Time Machine is now backing it up and encrypting as it goes.
This experience demonstrates that the SanDisk the problem is not based in M1 architecture, because this is a very recent Intel Mac (purchased October or November 2020) running Monterey. And this same recent Intel Mac had no problem formatting an identical twin drive for Time Machine before the update from Big Sur (which came on the computer) to Monterey.