Why can't I play a 2 player local game? I'm ready to return this series x and get my money...

that would entirely depend on the game, they all use their own mechanics but the first step is to have two controllers with a separate account signed into each one even if that's your guest account

I'm planning on running my 360 and XB1 games from an external drive, but because my internet isn't the fastest I wanted to start downloading the Series X upgrades now, ready to transfer to the Series X's internal storage so they'd be ready to play sooner.
I'll make do with the non-Series X games until they've been installed then.

With the exception of halo mcc you can't as guests cannot roam outside the home console

Since you are signing in online on a azure server not your console

With series s WHY in heavens name are you trying to play cloud when you can just install the game locally

You take a performance hit and you can't play 2 players and there is no next gen game you can't play even flight SIM runs locally

Unless you are talking about one s

When playing 2 player local I can't even get through a game without it crashing the whole xbox.

On the series x or one? On both I can get to manage games and add-ons but can't find where to delete local saves.