I had the same issue and I followed the directions in the following article kb5028997 and recreated the partition with 1.5GB of space this allowed the update to complete.
That solved it for me.
For anyone else reading: it's very important to disable SSD over-provisioning on the OS drive using the SSD maker's tool or if you have Intel Optane (on the OS drive), make sure it's turned OFF (using the Intel app) before you resize the recovery partition to 1500 (1.5 GB), otherwise you will encounter problems or possibly data loss!
Please BACK UP important data saved on the Windows drive BEFORE YOU BEGIN, just in case.
You can re-enable Intel Optane or over-provisioning after resizing the partitions.
Follow the advice at your own risk.