Raid is not adding replacement drive

You should have gone to Storage, Manage Devices, made sure you could see all disks in your Raid-Z2. (I have a mirror showing). Offline the bad drive, or just click on the Replace button on right side. It brings up the square box and you choose your new disk and click replace.

It looks like you went through adding a drive to your pool and selected the type as spare instead.

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