Two things: is this library suppose to be saving into the iCloud?
So I bought more  iCloud space and then got this message.




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Buying more storage was the correct move. It's common for our generation to have over 200 gigs of content therefore pushing us up to the next tier plan (2TB). Younger people have less pictures and are fine with the lower amount of storage.

The second item is also fine. Apple did not implement the documents/desktop iCloud syncing as seamlessly as I would hope so you'll see these confusing messages from time to time about "iCloud Drive archive". Nothing really to worry about.