Photos issues Re: Syncing via SSD & iCloud

I recently merged two iPhoto libraries and moved them to an SSD formatted as APFS (Case-Sensitive). It worked fine at first, but now I’m running into an error when trying to add new photos:

“There was an error attempting to free up disk space for import.”

I've tested this with various image formats (PNG, JPG, GIF, etc.) and the problem persists. It’s not a storage issue, as the SSD is 2TB with 1.67TB of free space remaining. Additionally, iCloud syncing has seemingly stopped, and repairing the Photos database didn’t resolve the issue.

I reached out on MacRumors forums, and one suggestion was that the Case-Sensitive formatting could be the cause. Before reformatting the drive to not being Case-Sensitive, I wanted to check if there are any other possible solutions / ideas why this is happening?

Thanks!