I have tried to create a standard volume and tried the option "encrypt the system partition or entire system drive".
The "encrypt the system partition or entire system drive" option is only for encrypting your OS partition or the entire system drive. In other words, system encryption. You are attempting to create a file container on a 2 TB USB drive.
From your description, you need to take ownership of this drive. Was this external drive used on another computer and you are trying to use it for the first time on a different PC?
Have you been able to modify and save existing files on the external drive?