Well, maybe as a German I have a special view on that topic, but while the actions of the Nazi regime certainly appear as "evil" to an outside observer, I never really considered them as "evil" but rather (in retrospect very bad and unnecessarily cruel) attempts to deal with the specific political situation found in the inter-war period in Germany. I am in no way trying to justify the atrocities that the Nazis did, but from within their own cultural bubble it must have seen like the "right" thing to do.
Nazi genocide was motivated by eugenics, "social Darwinism", and antisemitism. It wasn't at all specific to Germany; in fact it started in the U.S., and it's still ongoing through forced sterilization (which was the first method of genocide the Nazis used).
So-called "bad genes" are not and have never been a societal problem. Eugenics was widely known to be unscientific by the time the Nazis rose to power; it remained a popular idea in spite of this because rich and powerful people wanted to turn poor people against each other to solidify their power. Even today, there are many people who believe in eugenics despite evidence against it; and as I mentioned, genocide in the name of eugenics still happens even today, just not openly. Today, it usually affects indigenous people and other people of color, especially those who are mentally ill or otherwise neurodivergent.
But on the other hand I think deeply embedded sociopathic tendencies in our current mainstream culture and economic system are the main cause of the "real problems" our society is facing. This in my opinion might be one of the cases where what you call "sanism" is actually justified. I would also be tempted to say that this specific kind of mental illness has become accepted as the norm* (i.e. "capitalism") despite not being the norm psychologically speaking at all.
You call that a false instinct, but while I agree with you on many of the other examples of sanism, this might be one of the few cases where that instinct is actually right?
*Edit: in the sense that non-neurotypical people (aka "sociopaths") are having a selective advantage and raise to positions of power and that the majority is sometimes more, sometimes less willingly adapting to that.
A correction: the opposite of "neurotypical" is "neurodivergent", not "sociopath". The terms "sociopath" and "psychopath" are sanist terms which usually refer to people with antisocial personality disorder (ASPD), but are sometimes also applied to people with narcissistic personality disorder (NPD), schizophrenia, or other arbitrary mental illnesses.
Since you're talking about "having power", I assume you're referring specifically to ASPD. The idea that those with ASPD have an advantage in society is common, but some things noted on
https://en.wikipedia.org/wiki/ASPD#Epidemiology paint a different picture. I don't have the capacity to look up these sources, but if it's true that people with ASPD make up 50% of the prison population, are more likely to be dependent on drugs, and have an elevated risk of suicide, that paints a picture of a population that's very vulnerable, not powerful. I've heard the rumors that politicians often have ASPD before, but even assuming that's the case, politicians would make up only a small fraction of people with ASPD. I don't have ASPD, but I would imagine the idea of politicians having the same mental illness as them would be no comfort to the intense stigmatization of ASPD in society, where even knowing that they have ASPD will cause many to assume that they're a danger to society and potential serial killer. Diminished ability to feel empathy would make the idea of politicians having a similar experience even less comforting, I would think, as well.
As a matter of fact, I see people with schizophrenia, ASPD, and NPD as on the front lines of sanism, and most likely taking the brunt of sanist oppression, simply because society has such consistently and incredibly negative attitudes about them. I recently decided to do a search: "narcissism ableism". Nearly all results I got were about so-called "narcissistic abuse". There are entire sub-reddits dedicated to "narcissistic abuse" which specifically discriminate against everyone with NPD and ASPD, despite the fact that people with NPD and ASPD are likely to be victims of abuse themselves. The
only defense of people with NPD I saw anywhere on the Internet was a single mention on Tumblr, amidst a massive sea of direct sanist attacks against people with NPD, depicting them as vicious monsters.
The fact of the matter is that people with ASPD, NPD, schizophrenia, or any other mental illness are people. Some of them are abusive or otherwise bad, some of them are great people, and most of them are just trying to live their lives safely and freely. The fact that society automatically assumes that they are monsters is a grave injustice to them and to society as a whole.
So as for sanism against people with ASPD being justified, no, it's not. People with ASPD go to great lengths to hide their mental illness because they do not have a "selective advantage". On the contrary, even being found out to have ASPD will completely destroy them specifically because society is so violently sanist against people with ASPD, and mentally ill people in general. It probably also doesn't help that people with ASPD have diminished capacity for empathy, which means even building a community of support for people with ASPD must be difficult.
Back in high school, I used to worry about any similarity I may have had to people with ASPD. I got lucky: I don't have ASPD. But the thought of having ASPD, being one of these people that society thinks of as inhuman monsters, is terrifying. The thought of having to lie about your emotions, put on a fake persona, just for basic survival, because even being found to have ASPD will completely destroy you.