muscle will build on your legs regardless of what activity you’re doing, as long as you’re doing somehting, but typically aerobic activity such as running or walking builds lean muscle, and weight lifting (even body weight exercises like squats) build short muscles that look “bulkier”, as illustrated by this
my advice would be to keep going on the treadmill and let the results happen at their own pace. Your legs are getting harder, which is good, but you may still have substantial fat on them, along with the muscle you’re growing, which is why they still look large. Keep going though! Exercise is about doing a little every day.
Also, I don’t know about your diet, but weight loss is 80% diet and only 20% exercise, so it may be difficult to achieve your goal weight with exercise alone. Swapping unhealthy choices for healthy ones can really help speed up your results.