While you tried to be specific, I got lost in exactly what you are doing here because you just mentioned USB boot drive. I don't know which drive(s) are a full macOS drive and which are just a macOS installer. This is very critical information to have and I cannot follow what you have done.
You can use a bootable macOS 11.x+ USB installer on both Intel Macs and M-series Macs.
You cannot move an external full macOS USB drive between Intel and M-series Macs. I'm not even sure you can move an external full macOS boot drive from one M-series Mac to another M-series Mac. I am fairly sure there are some limitations due to the new concept of "Ownership" employed by the M-series Macs. I have not had the time to fully explore external full macOS boot drives on M-series Macs.
Have you actually created a bootable macOS USB installer using the instructions in the following Apple article using a compatible Mac (meaning one that is compatible with the OS you are trying to create)?
Create a bootable installer for macOS - Apple Support
You should also provide the exact models of any Macs you are using here so that we can confirm they are compatible with what you are trying to achieve. Please specify exactly which computer is the one needing to have macOS reinstalled & which one(s) are being used to create a USB installer. You can get the exact models by clicking the Apple menu and selecting "About This Mac", or if the Mac is not bootable, then entering the system serial number on the check coverage page here (please don't post the serial numbers on this forum since they are considered personal information):
Check Your Service and Support Coverage - Apple Support
Plus, please make clear what external drives you are using here. Is the SanDisk Extreme 1TB to be used for a full macOS installation or just to be used for the macOS USB installer?
FYI, the USB drive used for the macOS USB installer must be partitioned & formatted as GUID partition and MacOS Extended (Journaled). This is why you received the one error about APFS not being allowed for bootable install media.
It also seems your iMac running Sierra/High Sierra may be too old to even be used for downloading macOS Big Sur. If you want to create a bootable macOS 11.x Big Sur USB installer, then you generally need access to another Mac from 2013 to 2020.
If you are trying to reinstall macOS to a MacBook Air M1 laptop, then you can try booting into Recovery Mode to reinstall macOS. I really don't know which version of macOS this will give you on an M-series Mac since I haven't really paid attention to how it works. You must access the Startup Options menu by holding down the power button for about 10 seconds on an M-series Mac and select "Options":
How to reinstall macOS - Apple Support
If you cannot use Recovery Mode to reinstall macOS on the M1 laptop, then you will need access to another Mac in order to perform a DFU firmware Revive, otherwise you will more likely need to perform a DFU firmware Restore instead which resets the security enclave chip & system firmware as well as pushing a clean copy of macOS onto the internal SSD.
How to revive or restore Mac firmware - Apple Support