Would I install Monterey on the 1TB SSD before I clone the spare drive or after? As if I cloned the spare drive the 1TB SSD would copy that like for like...meaning there would be no Monterey on it?
Also, when I format the 1TB SSD to APFS, is it going to be bootable?!
Not sure what drive you are calling the "spare drive," but from what I have read, I think you have an external drive now with your data and from which you boot, currently running macOS version X (I didn't see where you ever said what that was). And you now have another eternal drive onto which you want to install Monterey, then move your files over to it to make it the boot drive.
If that is what you want to do, and assuming your current version of macOS supports APFS, you can run Disk Utility and partition/format the new external to APFS and use the GUID partition scheme to make it capable of being the boot drive. Then run the installer you downloaded and point it to the newly formatted drive as the destination to install.
If your current version of macOS doesn't support APFS, you will have to do an Internet Recovery to get to the Recovery system and format the new SSD from there, then do the installation to the new drive from there as well.
About macOS Recovery on Intel-based Mac computers tells you how to do that. Hopefully, your version of macOS is new enough to understand APFS. If you have to use this method, I would suggest you detach your current boot drive from the Mac before trying internet recover, just as an insurance that you don't format/install to the wrong drive. You'll be booted from the Internet, so both drives would be able to be written to at that point, and a mistake could lose all of your data.
Once installation is done, reboot holding down the Option key and select the new system as the boot drive. It should then run through the "Welcome" routine. You can create a user at the point it is offered to you but make sure the user is exactly the same as you have now and that the password is exactly the same as well. There is a reason for that, so be sure. One thing to look for in that initialization sequence is to really READ the screens. Apple's defaults may not be what you want or need. For example, Apple defaults to FileVault turned ON, when most of us believe that is not needed and makes some things more complicated. So, if you don't want FV ON, make sure to un-check it when it is presented to you.
Once initialization is complete, you can use Migration Assistant to migrate all of your apps/files from the original external drive to the new one. Because the account names and passwords on both drives are the same, the data should migrate into your new account just as they are on the old. Once the migration is complete, you can test the new system to make sure all is working, then set the boot drive to be the new system and you are done. I would put the old SSD on a shelf somewhere as an emergency backup just in case something goes wonky in the first few weeks. Once you are comfortable with the new system and it's all working well for you, you can do with it what you want, maybe reformat and attach as a second storage device.
