How to Get Over Feelings of Being a Failure in Engineering/Academia
It is not helpful to compare yourself to who you aren't.  There is an interesting concept in economics called &quot;opportunity cost&quot;, which is essentially the cost of not doing something because, due to limited resources, you chose to do something else instead.  In your case, you left your program and focused on yourself rather than your academics.  Essentially, you chose to work on your internal issues at the expense of your first masters program.  You couldn't do both ,and you had to choose one.  No problem with that.
A better question to ask yourself is: &quot;what do I do now?&quot;  You clearly have a goal in mind for who you feel you need to be in order to be a) successful and b) an academic.  Whether there is overlap between those two or not is debatable, but for now let's assume you want to be both successful and an academic.
You also feel that there are parts of yourself that need work still, and I'm assuming this involves at least academics and personal, internal stuff.  You won't be able to fix it all by posting to stack exchange.  Instead, I think that there are some low-hanging fruit problems that you can start to tackle.

You compare yourself negatively to the person you want to be.  Instead, use that as motivation.  So instead of &quot;I can't organize my research project&quot; say &quot;My best self can organize their research projects.  They do that by...&quot; and then list the things you feel you should be able to do but aren't doing yet.

You seem to be comparing yourself to your colleague who has taken a different path than you have.  Again, motivate, don't discourage yourself.  We compare ourselves to others all the time.  It is totally fair, and probably true, to say that we'll never be &quot;as good&quot; as everyone we look up to.  That doesn't mean that we can't be good at things, and it doesn't mean we can't use those people as examples of how to achieve our own success.


Whether you're starting later or not doesn't matter.  I personally remember thinking that I'd be &quot;so old&quot; when I graduated from my undergrad that I wouldn't be able to do any more learning or growth.  I have since come to understand that what I was really afraid of was being too inexperienced, not too experienced.  I didn't think I had enough time to gain the experience I needed, but I've since realized that a few years here or there to work on things is perfectly acceptable.  How many people go back and do PhDs in their fifties or even later?  Just because it's not how it's usually done doesn't mean it can't be done.
Finally, you appear to be planning to fail.  I think that you are giving yourself an unfair safety net here.  It's easy to say that I won't start because I will fail anyway.  It's much harder to start and fail.