Can't interact with objects or other sims

justbeingreddy  Please disable any apps you have that come with overlays: Discord, Steam, etc.  Disable the EA App in-game overlay too, under Settings > Application.

If that doesn't help, try playing in a clean user folder.  Move the entire Sims 4 folder out of Documents > Electronic Arts and onto your desktop.  When you launch the game, a clean folder will spawn with no content.  (Your saves and other content will be intact in the folder you've moved but temporarily unread by the game.)  Don't add anything to the new folder yet; just start a new save and see whether the problem is still present.

If that doesn't help either, please provide a dxdiag.  Hit Windows key-R, enter dxdiag in the run box, wait for the scan to finish, click "Save all information," and save the file to your desktop.  From there, you can attach it to a reply using the paper clip (Attachment) icon included with the other formatting buttons.

justbeingreddy  Your dxdiag lists a number of generic Windows update errors, so please run a couple of basic checks of your Windows system files:

• Hit Windows key-X
• Choose either “PowerShell (Administrator)” or “Windows Terminal (Administrator),” whichever option is offered
• Inside the window that appears, copy and paste “DISM.exe /Online /Cleanup-image /Restorehealth” without quotes, and enter
• The system will start validating soon. If it throws an error, please list it here
• After it reaches 100%, hit Windows key-X again
• Again, choose “PowerShell (Administrator)” or “Windows Terminal (Administrator)”
• Inside the window, copy and paste “sfc /scannow” without quotes, and enter
• Post the message you receive here

Restart your computer, hit Windows key-i, select Update & Security, and click the box to check for updates.  If any install, restart again afterwards.

For the issue itself, please try playing immediately after restarting your computer, with nothing else running.  If that doesn't help, please try playing in a clean boot:

https://support.microsoft.com/en-us/topic/how-to-perform-a-clean-boot-in-windows-da2f9573-6eec-00ad-2f8a-a97a1807f3dd

The one service to leave enabled is the EABackgroundService, which the EA App needs in order to run.  Disable the rest as described.

When you reboot your computer, go through the Task Manager's background processes list shutting down any service that doesn't absolutely need to be running, for example anything from MSI Afterburner to RGB software might still be enabled.  If you accidentally kill a critical process and it doesn't restart on its own, just reboot your computer again.

Don't open anything other than Sims 4 and the EA App while testing, not even a browser window.
If this helps, you can selectively reenable services until you find the culprit, then either leave that disabled or (if it belongs to an app you want to keep using) let me know what it is so we can try to fix the underlying issue.