System Data is increasing as fast as I can free up the harddrive

As you delete files, they get added to local snapshots and treated as "system data". You have to wait for the operating system to delete these snapshots without 24 hours or so.

Since you have EtreCheck, you can use the storage "clean up" function to manually trigger this. The Storage display in EtreCheck will also show you where your storage is being used and show you the areas where you can safely delete files. Dangerous areas like "Library" folders are in grey and EtreCheck will not show them in the Finder. You can get to these directories using the Finder or other tools, but I recommend you don't do that except in very specific situations.

What about the Transmission app? It is a bittorrent app so it is downloading & uploading content.

I would disconnect the laptop from the network since most likely it is some cloud based file syncing issue (disconnect the Ethernet cable if used and turn off WiFi). You can also try logging out/disabling of the Google Drive or any other cloud service such as iCloud since running out of free storage space is bad.

While you may have disabled Avast, I highly recommend you uninstall Avast by following the developer's instructions. Anti-virus apps, cleaning apps, and third party security software are not needed on a Mac and usually causes more problems than they solve.

Effective defenses against malware and other threats - Apple Community

FYI, If you completely run out of free storage space on an APFS volume, then it is usually game over and you will need to perform a clean install of macOS & restore from a backup. An APFS volume requires a small amount of free storage space just to delete a file since macOS does not reserve any space to prevent the issue. If the storage space goes to zero, then the only way to attempt to free space is hoping you have an APFS snapshot that can be deleted.

Unfortunately another recent post revealed that OmniDiskSweeper was not able to see some portion of the drive that contained the large amounts of data (most likely somewhere in the home Library folder) which surprised me, but unfortunately I don't recall the exact details. I do recall the user did eventually figure out where the large amount of data resided. See if OmniDiskSweeper shows any details on the Library folder within your home user folder (perhaps the information is hidden from the app and needs to have the "Security & Privacy" System Preferences modified to allow the app to access other folders even if "Full Disk Access" has been granted to OmniDiskSweeper). Does OmniDiskSweeper at the very least have "Full Disk Access"? I'm still trying to get a handle on how these latest macOS security settings work.

Controlling app access to files in macOS - Apple Support

Control access to files and folders on Mac - Apple Support