Plummet said..
Personally I don't think kitesurfing is for you. Kitesurfing is inherently dangerous and you have to be able to be functional in a emergency situation. It sounds like you are not functional in high stress situations. If I was you I would look at a different sport.

Or maybe it's the perfect sport! Generally you're in control so you can dial the danger/stress up and down as required, and you can go at your own pace. 20knot seabreeze on flat water is a different sport to gusty 35kt in big swell.

I used to be scared of heights, but after spending some time doing rock climbing it's not an issue now.

I'm sure you've been in some situations beyond your comfort zone without giving up right away...First step for the OP might be to get more comfortable swimming (so feet not touching the ground isn't an issue), and if they must kite in the ocean maybe some bodysurfing, bodyboarding, or surfing. Once they're comfortable in the water that removes one source of anxiety, and the rest just sounded like a bad teaching experience.

OP should absolutely drill emergency situations, just like the rest of us, and maybe spend time with a small trainer powerkite to get used to that. OP recognised their panic and dealt with the situation in a safe and sensible manner, by calling it a day when they were at their limits. Knowing when to call it is a critical safety skill, and kudos for OP to knowing their own limits.

It's interesting, probably the most relaxed I've ever been is when being tumbled by big waves. There's nothing you can do about it once you're in the tumbler, relaxing is 100% the correct way to go to preserve air, and your body automatically forces you into that state anyway.