The correct solution should be https://answers.microsoft.com/en-us/windows/forum/all/windows-10-update-error0x80070643/e6473fa4-f2d4-42c3-b4be-266b43454306
It has a powershell script that will do all this partition stuff for you. The reason it fails, is because the partition is too small, even after the 250 MB resize.
WinRE Information:
Windows RE status: Enabled
Windows RE location: \?\GLOBALROOT\device\harddisk2\partition1\Recovery\WindowsRE
WinRE Partition Index: 1
Partition capacity: 816836608
Partition free space: 354934784
Still it didn't work
Then I tried windows update troubleshooter which spent a lot of time. Then I tried the update again - success - after a LONG time of installing