Is the system version given below your question still valid? macOS 10.13? Or did you upgrade to a more recent system version?
Have you checked, if Photos is really using the library on your external drive or has switched to a new library on your system volume? Photos may switch to a new library in your Pictures folder, if it encounters a problem with the external drive, for example, if the external drive gets dismounted and the Photos background processes cannot access it, even if you are not working with Photos, when the external drive is not available.
Photos is showing the path to the currently open library in the Photos > Preference (or Settings) > General: Library location. Click the button "Show in Finder" in the "General" tab. is Photos still using the library on the external drive or has it lost the connection?
How much free storage is on the external drive and how large is your iCloud Photos Library? To start syncing with iCloud Photos, after iCloud Photos got disabled and needs to be turned on again, you need at least as much free storage as the size of the library in iCloud, even if all photos from the library are already in iCloud. Photos is estimating the required storage based on the worst case assumption that all items in your library are different from the items in iCloud and need downloading again.