I followed the instructions and had more than 50 MB free on system partition. It included commands that I didn’t actually know existed (I’ve never needed takeown).
I ran across a couple of places, such as this one on reddit, that had a set of instructions to free up space. I pulled up diskmgmt.msc and saw that my system partition had a size of 100 MB and was essentially completely full – 3% free. I tried my other desktop and got the same message. The first one failed with the message saying, “We couldn’t update the system reserved partition.” That happened after it downloaded updates (that takes a while). I used the flash drive to upgrade my Surface Pro with no issues. For me, the media creation tool wouldn’t recognize the USB drive, so I chose the ISO and copied the contents to my flash drive. Since I had multiple machines to upgrade, I downloaded the Windows 10 installer to a USB flash drive using the media creation tool mentioned on Download Windows 10. I had two desktops and one Surface Pro (the first one) running Windows 8.1. Over the weekend I upgraded my machines at home to Windows 10. Since this involves resizing partitions, it could wipe out all of your data.
Disclaimer: This is what worked for me, and it’s not guidance from Microsoft.