You can't use Rare Candy to evolve Ditto Prism Star into a Stage 2 Pokemon (e.g. Charizard), because Ditto Prism Star is not part of Charizard's Evolution Chain, correct?
Correct. As far as evolution lines are concerned, Ditto Prism is just another colorless basic Pokémon, and the Almighty Evolution ability only lets you put a Stage 1 onto it.