Do you have a Sidecar pref pane in System Prefs? See att. That is where I have always turned on Sidecar.
does yours work connected by cable?
does it work with wifi other than the phone hotspot?
Other requirements are:
2FA on both devices
Signed in to same Apple ID
Bluetooth on
personal hotspot off on iPad.
handoff on on both (as mentioned above)
There are a number of Sidecar troubleshooting articles around, which I have just been using because I could not get my new Mac to do Sidecar by WiFi (ok by cable). In the end my solution, which is also the final successful resort for many Sidecar problems, was signing out of iCloud on both devices, and then back in. Then rebooting.
PS my Displays pref pane is identical to yours, so nothing wrong there.