In my case there was insufficient space in the system partition and I had to delete language folders from the system partition to free up space.
I used the following fix from Microsoft (https://support.microsoft.com/en-us/help/3086249/-we-couldn-t-update-system-reserved-partition-error-installing-windows)
The description is for fixing issues with installing Windows 10 on a Windows 7 or 8 computer but the worked for me installing the Fall Creators Update on a Windows 10 computer.
NOTE:
In my case I have a GPT partition. The fix has you mount the system partition and give it a drive letter of "Y" and then open File Explorer to delete the language folders.
I was unable to find the "Y" drive in File Explorer so I had to navigate to each language folder through the command prompt, delete the files in the language folder (del *.*) and then delete the folder (rd <folder name>)