Looks like you actually have to resize the windows update partition (WinRE) as at times it requires 250M or more in (free?) space.
Not an easy job, but doable using this:
https://support.microsoft.com/en-gb/topic/kb5028997-instructions-to-manually-resize-your-partition-to-install-the-winre-update-400faa27-9343-461c-ada9-24c8229763bf
I recommend going into disk manager to check which partitions are on the disk (especially if you have created your own partitions). Usually it seems the like the Windows primary partition is second to last (4?) and the recovery WINRE last (5).
If the shrink disk fails, try turning system recovery to off. Windows loves to put those files at the end.
Had to do this several times now, seems all WIN10 machines sooner or later run into this.