I see what happened. LOL! Ok... Well I only have bad news, but this is what you did wrong: In Media Creation tool, you pick "Create installation for another PC" This means that Media Creation tool, will download Windows 10 SETUP files, to, as a goal, extract the files on a USB flash drive (or disk), and make it bootable. This is fine, but it also asked you: "Select a USB drive - The files on the USB drive will be deleted...", and instead of picking your USB flash drive, you picked your external HDD. It need to format the USB flash drive in order to prepare it properly in such a way that will work on all systems. As a result, your HDD was formatted, and you have a 32GB partition where you have Windows 10 Setup. Why 32GB? Because it doesn't need more, and some UEFI based system mostly the early ones) and BIOS based system do not support booting on drives partitions larger than 32GB. You can creating a partition on the remaining space, and run a tool like Recuva (free): https://www.ccleaner.com/recuva To try and scan you HDD, and try to recuperate what you can (be sure to save the data recovery OUTSIDE the external HDD, else you'll override what you are trying to recover). But expect massive, if not, total data loss. Sorry. It is a user error, it sucks.. but such as life.. shit happens... shit happens to all of us at times I can share you my mistakes that costs me a lot (ie: I need a time machine to fix it). We can only learn from our mistakes.
No, this won't happen. It can be resolved easily using simple mouse actions in Disk Management. You can handle this right now if you no longer want Windows 10 installed there or after a clean install. Remember to back up your data. If you intend to back up your information on that 1TB HDD, create a new partition in the "Unallocated space" area (right-click and select "New Simple Volume"). Be aware the drive must be reformatted afterward to return it to its original state. Make sure your files are restored before you proceed with the backup.
You can achieve this without re-formatting the entire drive by using an advanced disk management tool. Simply remove the Windows 10 Setup partition, transfer all data to another disk, and then reinstall the OS. This method is more efficient, though it often involves backing up the drive first to avoid potential issues.