Unable to download MacOS Monterey (Disk Password).

Was the disk encrypted with FileVault or was Disk Utility?

Use FileVault to encrypt the startup disk on your Mac - Apple Support

Encrypt and protect a storage device with a password in Disk Utility on Mac - Apple Support

From the message it appears you used Disk Utility.

In that case cancel the upgrade and ans restart and use Disk utility to erase the drive. You may be asked to enter you the password for the disk

Erase and reformat a storage device in Disk Utility on Mac - Apple Support

Disk Locked like below ??

Set a firmware password on your Mac

When you set a firmware password, users who don't have the password can't start up from any disk other than the designated startup disk.

This feature requires a Mac with an Intel processor. For the equivalent level of security on a Mac with Apple silicon, simply turn on FileVault.

How to turn on a firmware password

1. Start up from macOS Recovery.
2. When the utilities window appears, click Utilities in the menu bar, then choose Startup Security Utility or Firmware Password Utility.
3. Click Turn On Firmware Password.
4. Enter a firmware password in the fields provided, then click Set Password. Remember this password.
5. Quit the utility, then choose Apple menu  > Restart.

Your Mac asks for the firmware password only when attempting to start up from a storage device other than the one selected in Startup Disk preferences, or when starting up from macOS Recovery. Enter the firmware password when you see the lock and password field:

How to turn off a firmware password

1. Start up from macOS Recovery. During startup, you will be prompted to enter the firmware password.
2. When the utilities window appears, click Utilities in the menu bar, then choose Startup Security Utility or Firmware Password Utility.
3. Click Turn Off Firmware Password.
4. Enter the firmware password again when prompted.
5. Quit the utility, then choose Apple menu  > Restart.

If you forgot your firmware password

If you can't remember your firmware password, schedule an in-person service appointment with an Apple Store or Apple Authorized Service Provider. Bring your Mac to the appointment, and bring your original receipt or invoice as proof of purchase.