"System data" is taking up 200GB of my 245GB available on my Mac!

See:

After MAC OS 12 Monterey update that System Data Folder swelled to incredible 320 GB

What is “Other” storage on a Mac, and how can I clean it out?

Free up storage space on your Mac

OmniDiskSweeper Safe to use

GrandPerspective 

How to delete Time Machine snapshots on your Mac

See used and available storage space on your Mac

The final word from Apple on Managing the " Other " Category

Other: Contains files that don’t fall into the categories listed here. This category primarily includes files and data used by the system, such as log files, caches, VM files, and other runtime system resources. Also included are temporary files, fonts, app support files, and plug-ins. You can't manage the contents of this category. The contents are managed by macOS, and the category varies in size depending on the current state of your Mac.

Once the Empty Space issue is fixed >>

Is user profile correct, running Big Sur 11.2 ? If so, very out dated. Needs to be updated to latest version of Big Sur released Dec 13, 2021 version 11.6.2

Then the Monterey upgrade may work. Reasons are not know. From observations on these Forums - the OS needs to be totally up to date before attempting Monterey.