Seems like this has happened occasionally for years. https://apple.stackexchange.com/questions/408016/local-policy-error-when-disabling-sip-on-big-sur-m1 https

Seems like this has happened occasionally for years. https://apple.stackexchange.com/questions/408016/local-policy-error-when-disabling-sip-on-big-sur-m1 https://apple.stackexchange.com/questions/408016/local-polic... There's an answer there on how they recovered. Worth a try.