Well, "not recognized" sounds ominous. First, do this-- close Photos (sounds like you have no choice) and option-click on the Photos icon. (This is where you'd create a new Library.) Does it list Photos Library.photoslibrary and indicate it as your System Library? Are there any other Libraries listed? If so, you could try them.

You can see that my Favorites library is my System Library-- the only one that can sync with iCloud Photos. And you can see the path to the selected Library.
You could also do a Finder search for any other ".photoslibrary" files:
I have several, and you may have others that just got misplaced.
If all that fails to find a lost Library, then I'd create a new Library as you suggested. Create it in the Pictures folder, and name it something you like. You can open it in Photos by double clicking the photoslibrary file in Finder And then you'll need to make this your System Library in Photos>Settings>General.

"Use as System Library" will gray out when you select it.
Hopefully you can now allow Photos to sync with iCloud. Then, in Photos>Settings>iCloud 
check iCloud Photos.
Then you sit back and wait for the Library to fill from iCloud. Things like People and Duplicates will take a while (weeks for a really large Library), but all the pictures should show up within a few days. Keep the Mac plugged in and running all night, but have Photos in the background--maybe Finder in the foreground-- so Photos doesn't delay the download thinking that your using it for something else.
Let us know how it goes....