So your error is probably about .vcf version, or the fact that the list of contacts is not formatted correctly.
As I understand it, in this image alternative “device” storage is on SIM card.
Is the problem about a .vcf generated from this source? There are tools out there, or Linux scripts, which will convert a .vcf to a certain version. You can also clean up a .vcf by hand.
Within Contacts > Settings > Import is the opportunity to import from SIM card. Did you try this?
A search of versions .vcf on the forum will give some results, quite a lot of clues in this issue https://gitlab.e.foundation/e/backlog/-/issues/972.
Maybe clues here too How to import .vcf card on native Contact App on FP3+? - #6 by AnotherElk.