I realize that, and the 2 laptops I've had this issue with, have a Windows RE partition. I think I'm more in shock that a Windows update is attempting to touch it, without notifying the users or admins of the machines. The two happen to be OEM, Alienware's from Dell, and they both more than met the RE partition size requirement (we have them set to 2gig). They were both fresh re-installs (direct from Media Creation Kit via USB).
Oddly enough, running a sfc /scannow found something, and upon reboot, the update went through without any hiccups. sfc is almost always my last ditch effort because it doesn't really tell us what went wrong in most cases and just takes bloody forever 😉. (If someone knows of a logfile, I'd love the info. I've never located one short of the SR tags in the cbs.log. and they aren't exactly forthcoming, just that a problem was detected and repaired)
If anyone else happens to see this down the line, and run into the same issue with an OEM Dell Alienware (ours are R5), give the sfc a shot after you resize.