I've recently updated the utilities to connect to my Synology NAS and MS OneDrive. I tested by disabling them, thinking it might be a networking handshake or connection problem. I got the same results. I have a Dell display I've now disconnected and it didn't make a difference. I unplugged the Thunderbolt and USB docs I had connected and took the machine down to bare stock out-of-the-box settings but still see the problem.
The iMac is configured much like my 14" MacBook Pro and M1 mini and they don't exhibit this behavior (screen freeze at startup). I don't run a lot of third party apps, avoid anti-virus or other apps that lurk in the background. This seems unique to the 24" M1 iMac.
I'm still trying to isolate the problem, backtracking at what I was doing when this all started. I'll post as I try more options.
I'm about to wipe the disk and reinstall but I didn't want to go there if this is a known problem others have seen and solved.