A Windows update needs more space than it says, and here is why

The update says it needs a few gigabytes, you have more than that, and it refuses. That is not a bug: an update needs room for several things at once and the number it shows you is only one of them.

What the space is for

• The download. The figure the update screen shows.
• The unpacked payload. Roughly the same again, since the download is compressed.
• Applying it. New components are written before the old ones are released, so both exist for a while.
• A rollback. Windows keeps the previous version so the update can be undone, which is the Windows.old folder after a feature update.

So the practical requirement for a feature update is 20 GB or more free, rather than the size shown next to it.

Reserved storage, which is meant to prevent this

DISM /Online /Get-ReservedStorageState

Windows sets aside a few gigabytes specifically so updates always have room. If it is enabled and an update still fails, reserved storage has been used by temporary files and the rest of the drive is genuinely full.

Clearing enough, in order

1. Settings, System, Storage, Temporary files, including previous installations and update cleanup.
2. Empty the Recycle Bin.
3. Turn hibernation off temporarily if the machine is short: powercfg /hibernate off.
4. Remove restore points except the most recent.
5. As a last resort, use an external drive: the update process can borrow one when Windows offers to.

When an update has already failed

A failed update usually leaves a partial download in SoftwareDistribution, so you are now short by the size of something you cannot use. Resetting that folder is the supported fix and is covered in the Windows Update caches.