Problem viewing images at full-size.

For years when I wanted to view a screenshot or image on my desktop (or in Finder) I simply click-to-highlight and then hit Space. It would pop up to a large image on my screen. For the last week it no longer does this. Instead I get a much smaller image surrounded by blank space and a prompt to "Open with Preview".

I have for years used this shortcut to view final images before sending to clients and cannot spend time opening each one in Preview. How do I get back to using this the way I did?

There was a thread from 2020 I saw on here, but no final answers were given (except to start up in Safe Mode - which didn't solve it). it can't be just me having this issue... can it?

Mac mini M1 Monterey 12.0.1