Insufficient space to install lightroom classic despite having plenty of space!

You install programs on your computer hard drive, not on a cloud location

Install on non-boot drive https://community.adobe.com/t5/get-started/moving-ps-and-lr-classic-from-internal-hd-to-an-external-hd/td-p/10945231
https://community.adobe.com/t5/download-install/how-do-i-install-creative-cloud-on-different-drive-than-c/td-p/11250643?cid=101&cgid=18323&page=1

2TB of Cloud Storage is a totally separate thing from the system requirements necessary to install and run software. 

Please ensure your computer meets or exceeds the minimum system requirements to run Creative Cloud + your OS + all other apps you intend to use. Keep in mind these are bare minimum recommendations. You may need more physical and virtual memory to support everything you do. 
https://helpx.adobe.com/creative-cloud/system-requirements.html