Maybe this example will help. Let's say a user has 1 bitcoin UTXO that is tainted and then 1 bitcoin UTXO that is not tainted. They create a transaction that takes both UTXO as an input and as an output creates 2 UTXO of 0.5 bitcoin.

In this scenario, is the first output UTXO of the transaction tainted? The second? The miner's reward UTXO? Someone else's output UTXO?

Both, not the block reward.