Did this bug ever affect you in Catalina/Big Sur or just Monterey? I have been unable to get my (originally) iTunes 8 library to work with any iteration of the Music app except Ventura which I have not tried. It refuses to work with my external drive that I keep it on, and it is too large for my internal.
My issue is slightly different but a variant on yours. Once the .itl is loaded the app stops and says "Saving Music Library..." and hangs, but I can see the beginnings of my track listing. I have to then force quit and attempting to re-open the app brings me to a blank library.
If this is fixed it would be a sigh of relief. I hate having to keep two computers on just to listen to my tunes. Before this was all seamless.