Since Catalina (Mac OS X 10.15) introduced the system volume pair, installing the Mac system has apparently become much more complex. (More detailed information is available at Howard Oakley's site, The Eclectic Light Company, particularly in the article macOS Catalina Boot Volume Layout.) Before Catalina, I was able to create a Mac bootable system disk on a drive that had previously been used to store data. I was able to do that without any particular risk to the data that was stored on the drive.
The error that first prompted me to post this question was apparently related to the fact that the target drive had a previous (pre-Catalina) system installed (Mojave - Mac OS X 10.14). Anyway, operating on that assumption, I deleted the System folder on that volume, which allowed me to successfully select it as the target drive for installation (solving the issue in this discussion's title).
However, that didn't allow me to complete the installation. While the installation progress showed over 50% remaining for the installation, the message "An error occurred while extending ownership to this volume." appeared. I was only able to work around that message by canceling installation, completely erasing the target volume, then starting the installation again. Before erasing and restarting installation, I copied the volume's data to another volume.
This ordeal has convinced me that it's considerably harder to install the current macOS than it used to be to install a Mac operating system. I understand that security concerns demand a high priority, but I'm not sure that these particular issues are directly caused by security measures. I think that they are rather probably related to less thorough testing of procedures before releasing the product.
