Holding the power button does nothing special on these older laptops and is only a startup option for the new M1/M2 Apple Silicon Macs.
You either need to use Command + R or Command + Option + R to access local recovery mode since this laptop only supports up to macOS 10.11 El Capitan. If you have access to another Mac from 2008 to 2015, then you can create & use a bootable macOS 10.11 USB installer by using the instructions in this Apple article:
Create a bootable installer for macOS - Apple Support
Why would an SSD be showing on the Option Boot screen? It is showing an icon for an internal boot drive, either the boot drive or it is showing the local recovery mode partition located on the internal boot drive. External boot drives would have an orange icon.
If the icon is for the internal local recovery partition, then it means that there is an issue with macOS on the internal boot drive.
The most likely issue is a failing boot drive, but there could be a lot of other possibilities for a Kernel Panic as well such as bad or incompatible memory, bad Logic Board, or some externally connected device is causing a problem. Have you made any recent hardware or software changes?
You can try running the Apple Hardware Test located on the second DVD which shipped with the laptop from the factory. You need to boot from the 2nd DVD to access the Apple Hardware Test.
