This is much more complicated than most people know. The difficulties in changing partitions on drives require Administrator privileges and may or may not be possible depending on the individual PC SSD or HDD. There are ways to run scripts for authorized Users to complete the needed steps, but this would require some careful update programming.
The bottom line is that for 95% of PC's running Win 10 this update has no significant effect on the operation of the Operating System. It is bothersome to see the Red Warning and the incomplete update, but that is just cosmetic.
Many of the older Win 10 PCs will likely be going to Win 11 when Microsoft publishes easy methods of making this Update. The Official Microsoft Update to Win 11 for the old Win 10 PCs is already released, and allowed by Microsoft. With this update, there are no guarantees and no further updates to address problems you may have. Microsoft has a Disclaimer on this Win 11 Update that states (in so many words) that it may tank your PC completely as they are not dealing with old hardware drivers for Win 10 anymore. Most of these old PCs are just too slow, too outdated, insufficient RAM, reqire a TPM (Trusted Platform Module) or TPM 2.0, need better CPU, and likely need to be replaced. Getting a new Win 11 PC is necessary for many people. No need to jump ship to Apple over this trivial Win 10 update. If you can wait for a few weeks for Microsoft's more public announcement you will be miles ahead. If you want to make the leap to Win 11 now, look up the Registry changes, make them, and go for the Win 11 update. You will need to buy a bigger Thumb Drive for the image. The Win 11 change will resolve this insignificant issue of Recovery size and Partition creation. It will be a complete OS changeover - for those who just can't afford a new PC.
Tom's Hardware has a very good article on what to do: https://www.tomshardware.com/how-to/bypass-windows-11-tpm-requirement I am not affiliated with them, but like their site, very good one. Oh and yes, YOU are responsible for any problems, headaches, troubles, or tanks people.
If you can't wait, then get a new PC (of your choice of course).