The sync client for Windows takes up the entire disk space used by the account on the cloud, even though virtual files are enforced. The option āFree up local spaceā on the client does nothing, every file takes up the space it would if it was fully downloaded.
I see someone else noted the same problems in 2022 and 2023, opening these questions:
If it is just here on the forum, you cannot know if it was fixed or not. Also the errors were not very specific, e.g. specific error message or something where you could easily reproduce the problem. There was a suspicion, if an application tries to access the files all the time (e.g. antivirus), and for that reason the local space is never freed.
And there is no response whether this is the case or not (e.g. different behavior when disabling antivirus etc.). If the mechanism is clearer and there is an issue with the client, you can then go forward and report an issue on the bug tracker (there you can actually check the status and see if it was fixed and when).