Formatting my HD disk

Catalina (and any macOS after Mojave) must use APFS (case insensitive) for the boot disk.

But your disk seems to be a spinning HDD which is VERY slow with APFS so I'd not use that as a Catalina boot disk. Instead, you might either replace it with a SSD disk (might be difficult to do to an iMac) or use an external SSD as a APFS formatted boot disk and internal disk formatted as MacOS Extended (Journaled, case insensitive, GUID) as a data disk.

Data volumes can be other formats but usually it is MacOS Extended for HDD, and APFS for a SSD. exFAT or FAT (GUID or MBR) if you must share files with Windows users.