IPhone – Updating iOS, Storage Mystery Math

I'd like to update my iPhone Operating System. I plug the iPhone into my desktop computer, sync up to itunes, then press the Update button, right below where it says

A newer version of the iPhone software is available… To update your
iPhone with the latest software, click Update.

I then get a popup that says

Updating to iOS 10.3.2 requires at least 770 MB of free space on your iPhone.
Please change your media sync options to make more storage available.

Huh? I'm looking at the data storage summary at the bottom of itunes. It says quite clearly that I have 2.48 GB free in the little color bar describing the iPhone. I need 770 MB, and I have 2.48 GB available, then why, for goodness sake, am I getting that mystery message?

When I learned math, I thought that 770 MB was a heck of a lot smaller than 2.48 GB.

Note: There is some other odd stuff going on with this phone's memory display. I've deleted all the photos from the photo gallery on the phone, yet the data summary bar shows 1.49 GB, 1760 photos. It should show near zero memory / zero images.

Note: Its possible that Dropbox is messing things up. I would have thought that the Dropbox memory usage would be accurately reported out on the data usage summary in iTunes. My Dropbox storage capacity is 10GB, of which I typically use 8GB. (In fact is there a DropboxIgnore for the iPhone? I really only need access to photo backup and my password vault from the iPhone…) On the phone data summary color bar, there is an Other category, sized at 4.84 GB, which I assume to be Dropbox.

I've clicked Synch, Done and rebooted the entire computer numerous times trying to get stuff to update. There are minor variations to the storage usage display, but the photo segment doesn't seem to update, nor will the OS update, and utilize that empty space.

Anybody know what's going on here?

ref: windows 10, itunes v12.6.1.25, iphone 6 with 16GB memory, sync via USB cable.