unmount disk error while erasing disk via disk utility during OS reinstall

It sounds like you tried to erase the volume while it was being used - you can't erase the boot drive the system is running from.

In either case, the path from here is likely to boot in recovery mode and reinstall the OS from there.

Follow the instructions on: Use macOS Recovery on an Intel-based Mac - Apple Support

There may be more going on, but I suspect you may not have properly erased the drive. If you have properly erased the startup drive, then there will be no OS for the Mac to find when you boot it and I expect it would display a folder with question mark.

The fact that you can reboot the Mac in recovery and are offered the El Capitan OS is good news. You just need to prep the drive properly. If you've been running OS 12 Monterey on that old MBP, the drive is formatted with APFS. Unfortunately, Mac OS 10.11 El Capitan is not APFS aware and the installer for that OS cannot access an APFS volume. You need to reformat the drive with Mac OS Extended (Journaled).

At this point I suggest this:

• Reboot the Mac in recovery using Command-R.

• From the macOS Utilities screen launch Disk Utility.

• In DU, click View > Show All Devices. Select the topmost device in the sidebar - it should be named something similar to "Apple... Media". (Do not select any indented volume below it.) Click Erase and format the drive with Mac OS Extended (Journaled) format and GUID partition scheme. Name the drive "Macintosh HD".

• After reformatting you can now quit DU and launch the Install Mac OS X application on the recovery Utilities screen. Select the newly formatted "Macintosh HD" as the destination for El Capitan and follow the prompts to complete the installation.

Once you have an OS installed, you can proceed to upgrading to Monterey via the normal upgrade paths.

If you can coax the recovery boot to offer a newer OS, you may be able to take advantage of that, but you do need to format the drive properly for whatever OS that is offered.

El Cap 10.11 and Sierra 10.12 require a Mac OS Extended format.

The APFS format may be used when installing macOS High Sierra 10.13.

The APFS format is required when installing macOS Mojave 10.14, macOS Catalina 10.15 and any newer OS on your MBP.

Regarding your recovery boot options, this is what Apple has to say on the subject:

How to reinstall macOS - Apple Support

❝On an Intel-based Mac:

• If you used Command-R to start up from the local Recovery system, you get the current version of the most recently installed macOS.
• If you used Option-Command-R to start up from Internet Recovery, you might get the latest macOS that is compatible with your Mac. 
• If you used Shift-Option-Command-R to start up from Internet Recovery, you might get the macOS that came with your Mac, or the closest version still available.❞

alecela wrote:

Tx again for the advice. I followed your advice and this time managed to re-install El Capitan without any error message.

Does this mean you were able to boot into the macOS Setup Assistant after the install to create a new user account?

If so, then what changed between the last successful boot of the new OS and the boot looping?

Unfortunately once the install is 'done', the computer simply rebooted and got into similar loop as before: Apple logo shows up, the progress bar below would move a little then it would restart again and same loop.

FYI, the install is not complete until you see the Welcome screen where you begin to configure the Mac through Setup Assistant. Did you get that far, or did the boot loop resume as soon as the computer rebooted after phase #1 of copying the installation files to the internal SSD?

The install process consists of phase #1 where the installation files are downloaded to the internal SSD (phase #1 copying of files rarely fails). The installer will reboot to begin Phase #2 where those downloaded installation files are run to further configure the system (this is where most installation issues occur). Depending on the OS, there may or may not be another reboot before you are greeted with the Welcome screen.

If you were able to finish Setup Assistant by creating a new user account (or restored from a backup), then most likely the issue started when you restored from a backup or installed third party software.

Otherwise it sounds like the laptop has some sort of hardware issue assuming you erased the whole physical SSD.

If the whole physical SSD was not erased, then it is possible the partition and/or file system is still a problem.

Make sure to disconnect all external devices in case one of them is causing a problem.

You can try installing macOS onto an external USB3 drive to see if that is successful. If successful, then the issue is most likely with the internal SSD (the physical SSD failure, or a partition/file system issue, or third party software issue).

Another possibility is your laptop has a GPU issue. Apple 15" & 17" MBPros from 2008-2011 had an extremely high GPU failure rate, later models didn't have as many issues, but there were still a few here & there. You can try booting into Safe Mode to see if the system will boot (or the install process will complete Phase #2).