System restore not working - "insufficient storage"

Give me a minute, I'll give you some other commands

Run these 2 commands one after the other. Just copy/paste them.

vssadmin resize shadowstorage /For=C: /On=C: /MaxSize=300MB

vssadmin resize shadowstorage /For=C: /On=C: /MaxSize=10%

That should get rid of the buggers.

There must be a space before the slashes. How come your CMD does not work with paste - it should.

Those commands work 100% - believe me.

PS: Just saw you also forgot the /on=C:

If the specified number showed as invalid, you must have made a mistake. 300MB is a valid option - it is the minimum for shadowstorage.

Question is: can you make restore points now.

I just set it to try to make a restore point and again got that error. I feel this is taking up too much time from you.
(I was typing into the black command prompt box, not the search box, which is why it wouldn't take paste.)

And it is still listing the old restore points although I don't think they are really there.

That's why the first command was important. It would have gotten rid of the whole shadowstorage. Try this command and then the second 10% command.

vssadmin resize shadowstorage /For=C: /On=C: /MaxSize=1%

Here is something you can try that I found.

These are part of a message received when trying to run a Windows 7 backup with a system image. I myself have encountered the problem but luckily after some searching have found a solution that worked for me.

Unfortunately I don't have a screenshot of the message you may have received but I do have a text version of it:

[Window Title]
Windows Backup: Troubleshooting Options
[Main Instruction]
Check your backup

[Content]
A shadow copy could not be created. Please check "VSS" and "SPP" application event logs for more information.
Details: Insufficient storage available to create either the shadow copy storage file or other shadow copy data.

[^] Hide Details [Try to run backup again] [Change backup settings] [Cancel]

[Expanded Information]
Backup time: 10/25/2009 3:23 PM
Backup location: Terra-Stor (M:)
Error code: 0×81000019

So the insufficient space this error is referring to isn't the space on your hard drives that you're trying to copy the backup too, it's the space on that small 100MB boot partition that was created during Windows 7 installation. You can look at the partition yourself by:

Start
Right click My Computer
Manage
Storage > Disk Management
Right click the 100MB
Properties
If you have less than 40% of Free Space then that's the insufficient storage available error. See that drive is actually used to create your system image and therefore cannot drop below 40%. According to a Microsoft employee there is a problem with Windows 7 which causes it to use up more than 60% of that 100MB boot drive.

The trick around this problem is:

If the System reserved partition cannot be extended using Disk Management because of lack of contigous space adjacent to it, creating a new system volume is the workaround. Here are the steps to move the system volume to any other volume:
Choose where you want to have your system volume. Few things you need to keep in mind:
System volume can only be created on a primary partition of MBR disk.
If system volume & boot volume are together, then BitLocker feature cannot be used to encrypt volumes on your machine.
Suggest creating a new volume (say F:) on the same disk that contains the boot partition of size of about 490 MB (be careful to keep it less than 500 MB)
My Edit: To do this you must be in the manage properties as per the steps above.
Right click your C:\
Shrink Volume
Enter 490MB
Right click the new drive
New Simple Volume
Assuming Windows 7 is installed on C: on your machine. From an elevated command-prompt run: bcdboot.exe C:\Windows /s F:.
From elevated command-prompt run: DISKPART
From the disk part command-prompt:
DISKPART> select volume F
DISKPART> active
Now you can reboot your machine and F: will become the system volume. You can undo this by repeating the same steps using the original system volume (you have to assign drive-letter to it) to revert to your previous configuration.

via social.technet.microsoft.com

Once this is done you can head back into Manage:

Right click the new 490MB drive
Change Drive Letter and Paths
Remove
Removing the letter will also remove the drive from appearing in My Computer. Now you should be done. The drive should now be 490MB which is plenty for Windows 7 backup to create a system image. Go to Backup & Restore and run through the wizard again and this time hopefully it should work.

Source: System restore not working - "insufficient storage"