I had this same issue and a Microsoft support technician completed the following steps and wrote this tutorial for me when I requested it. Now, instead of the Service Host: Local System using over 90% of my disk space, it only uses a little over 20%:
How to clear system junk files
step 1: please press windows key + r key at the same time to open run command, In run command window type temp then press enter key. You may see temp folder
step 2: In temp folder please press ctrl+a key at the same time to select all the files, then press delete key. It will delete all the files and store it in recylce bin
step 3: Then open run command using the first step, then type %temp% and press enter key. In %temp% folder delete all the files, some files cannot be deleted. please skip those files alone
step 4: Then again open run command using the first step, then type prefetch and press enter key. In prefetch folder delete all the files
step 5: Now select recycle bin and right click in that remove/clear files from recycle bin. These will remove the system junk files
To impove system performance
step 1: please open run command, in that type msconfig then press enter key. You may see system configuration window
step 2: In that window select boot tab, then select advanced options. In advanced options window click the check box under number of processor and maximum memory. please use the drop-down to set maximum or full performance in your PC
step 3: then click ok, after that please click apply and ok. You may see a pop up to make the changes more effective restart will appear, please click restart to enable full performance in your PC
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