Syncing iCloud Drive to my Mac immediately creates 100gb of system storage - OS Monterey

I love iCloud and have been using it since forever. I understand that iCloud Drive is not a perfect cloud feature and is mostly about syncing files across devices. As an owner of an iPad, 2 Macbooks, and 2 iPhones, I really love iCloud.

The problem started when my Macbook Air for work became glitchy as I was lacking enough free space. I did a factory reboot and downloaded the new OS Monterey (yay!). Just in case, I didn't reboot through Time Machine back up. I wanted the Macbook as clean as possible. As soon as I synced my iCloud Drive, i gained 97 gb of system storage and I was again out of storage (121 gb Macbook Air)

I got angry and unsynced my iCloud Drive.

Doublechecked that Time Machine was never on after the reboot.

And then I deleted my cached files through finder > option Go > Library > Caches.

= 12.4 gb of system storage

I became happier and decided to sync iCloud Drive again (because I need the easy navigation for work), but then system data started increasing and became 97 gb AGAIN.

I assume that a STUCK "WAITING TO DOWNLOAD" (NOT upload) iCloud action is the culprit of this mess. But I have no method of tracking this action and deleting it. And now, I can't sync iCloud Drive to my Mac. This is VERY frustrating.

Need solutions for the below:

• Reason why syncing iCloud Drive would immediately cause a 90 gb increase of system data
• How to isolate the system data associated with my iCloud Drive
• How to delete the associated system data so that I can sync my iCloud Drive with my Macbook again.

Please help.

Went through THREE calls with Apple Support and no help for now.