Recently when trying to do a Win7 to Win10 upgrade I ran into a new issue where the upgrade failed with a message; “Windows 10 couldn’t be installed” which included the detail; “We couldn’t update the system reserved partition”. Research indicates there was insufficient room despite it only requiring about 13 KB of free partition space.
Apparently this must be somewhat common as Microsoft has published a rather lengthy workaround where you delete a folder of fonts in the reserved partition but there are many steps dealing with permissions.
I tried resizing the partition with Disk Manager unsuccessfully, though I may have been able to do so with a command line and DiskPart, but before doing so, I stumbled on the following link which uses a free little partitioning tool EaseUS Partition Master. This allowed me to reduce the C partition size slightly and increase the system Reserved partition. Very slick, very easy, and worked like a charm. Windows 10 then installed trouble free.