I am very new to electronics and electrical engineering background. I am working in an electronics engineering job for the past 4 months. My question is: what can I use or what is the best way to have at my workshop at my home for the DIY projects so that even if a short circuit happens in my experiment that does not shut off power to the rest of the house. In my lab, we use an isolation transformer. Is it possible to create an isolation transformer from a normal transformer?
An isolation transformer is just a normal transformer that has the same input voltage as output voltage. It is also usually fused or has a circuit breaker. You can make one by putting two transformers back-to-back such as 120:24 and 24:120. It's not usually a great thing to do unless your current requirements are modest and you have no other option. Good isolation transformers often have one or two screens between the primary and secondary windings.
As well as preventing your distribution box circuit breaker (or fuse) from blowing, that also helps prevent some kinds of electrical shocks because you need to touch two different points to be shocked rather than one point and earth.
If you plan on working with mains voltage a lot, a variac that allows you to set mains voltage higher as well as lower than the input PLUS an isolation transformer can be good. Variacs typically do not provide isolation (they are variable autotransformers).
A trick I've used sometimes with mains-powered circuits is to use a circuit breaker or fuse and add a (say) 100W incandescent bulb in series. The bulb has a low resistance for modest current, but increases greatly with higher currents so it acts as a PTC current limiter. If there is an issue, the fault current is much less than it would be through a typical circuit breaker.
A transformer will provide additional impedance for workshop circuit, particularly if it has a current rating that is less than the branch circuit rating. A circuit breaker rated for the transformer rating will also help. If you own the house, you might consider adding a branch circuit for the workshop. The house should already have several branch circuits for various areas so that a fault in any one area will not shut down the whole house. Where I live, separate circuits are required for kitchen and bathroom receptacles and for certain higher loads. You should determine which circuit breakers feed the various receptacles, lights and major loads.