Forum Discussion
Faulty patches on Server 2022
They actually did release statements about this issue. Turns out you need to have a recovery partition (and it has to be big enough) in order for the update to succeed.
This Reddit reply sums it up on how to address this pretty well: https://www.reddit.com/r/sysadmin/comments/1atmyhn/comment/krjve0s
I believe the script can be batch ran on multiple systems, but that's not the point here. The point is they should have already be aware of the default recovery partition size that's defined by default in their own installation environment. What could've been done instead when there is barely space for the partition is to just copy Winre.wim out, apply updates to it, thin it using dism /export-image, and overwrite the new wim back to the recovery partition (The update itself barely makes the wim grow so the remainder space isn't a problem).