Wrong Free Space Displayed for Mounted Drive

It's a pre-formatted drive for PC's. It is my understanding that the xbox one requires the drive to have its own formatting to stop people transferring files to PC's and tampering with them.

My system can obviously see that the drive is there and it also displays that 2.7tb of free space is available.

There is no max limit of 16gb, that's completely wrong. I'm currently using a 2TB hard drive and have 2.2TB of free space, the limit is 2 drives and it has to be USB 3.0 for data transfer speeds.

You might check how much of your free hard drive space is used up. Even if there is room to install it, the game still needs a good amount of space to move around in. Especially with larger games like GTA. You might need to get a larger hard drive. If youve
got lots of free space and still having issues...it could be something wrong with the internal memory that would require repair.

support.xbox.com/.../free-up-hard-drive-space

Are you installing the game and DLC on the same drive (e.g. an external USB drive)?

Can you try moving the game with DLC to another drive (e.g. to the internal drive if installed on an external USB drive and vice versa)?

Can you also check that you have enough space on this very drive you try to have the game and DLC on (instead the "total" free space shown on the My games and Apps screen)?

For example, you have the game and DLC B installed on the internal drive. The Internal drive now only has 500MB of free space. However, an external USB drive still has 9GB free. So while the console shows 9.5GB free space, the DLC won't install because there
is not enough space on the internal drive.