I've set retention policies but still get space is insuffcient error

[Rust4484]

Retention works just fine for me.  If any of those backups were made under a different task or specification (while testing along the way), they won't be affected by the retention set in the current task... you'll need to remove them manually.

I changed the existing task to include the new retention. Are you suggesting it would be best to create a new task and start over?