“We couldn’t update the system reserved partition” error is usually caused by insufficient space on the System Reserved partition. Nowadays, when you install Windows to an MBR disk, Windows will create an additional hidden partition labeled as System Reserved, which stores important boot files and normally locates before the system partition (often known as C: drive). System reserved partition often occupied 100MB in Windows 7, 350MB on Windows 8, and 500MB on Windows 10.
If you pay attention to those figures, you will probably find out the reason that caused Windows 10 upgrade failure. Since upgrading to Windows 10 needs more space on the System Reserved partition than Windows 7/8 requires, Windows 10 will not upgrade unless it detects enough space on that System Reserved partition.
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