Not even a 40kB image can be in the Drive. However, you are able to download images to the Downloads folder, or create a screenshot from a source and save it to the Downloads, and you are able to transfer files to any USB Drive that's connected to Chrome OS.

My school Chromebook had an issue for this. Usually, I have infinite storage in Google Drive, but not in the Downloads folder.

The Best Option:

Basically, clear your browsing data with the drop-down menu saying "All time", then type chrome://inducebrowsercrashforrealz (click here for more information) and wait for it to load Chrome OS, then either sign out and back in, or restart the device. Hopefully, that will do for hours or days. It can be an easy fix, but it also depends on what situation you're in.

What happens is that your Google Drive is part of the Downloads folder space, and thus, the Downloads folder is part of the space you have on your Chromebook. If you have 10GB in "System", then you're screwed, unless you powerwash your device by pressing Esc + ⭮ + ⏻, and when that happens, your boss or teacher will yell at you (not literal).

This Google Community question talks about the exactly same issue: https://support.google.com/drive/thread/41383115?hl=en.

The Solution:

Don't panic, here are the steps of what you must do to fix this:

1. Check your drive and see how much space you have, write it down.

2. Do the same thing with the Downloads folder. (The Downloads folder is actually the main culprit)

3. Go to chrome://drive-internals.

4. Click on "Clear local data" and confirm.

5. Then click on "Restart drive."

6. It's fixed!

I actually asked this up with the Chromium bug forum about this problem, and they suggested me this solution. I used to have zero bytes available, now it's 6GB in Downloads. 🙋🏻‍♂️