Purchased movies (and TV shows) may still appear in your iTunes library because they can be streamed from Apple's servers (iCloud) without the video files being stored on your computer's drive. To check, show your Movies library in the iTunes window (click Movies button at left end of horizontal bar). Near middle of horizontal bar, click My Movies. At right end of horizontal bar, use control to show library using the Movie List view. Your My Movies list (with your purchased movies) is shown as a plain list with columns.
You can sort this list by clicking on the heading of the column to sort by; for example, click on Name to sort by movie name. If the iCloud Download column is hidden, make it visible; this column is narrow, with a cloud symbol in the heading. Right-click the heading row to show/hide columns. You can move columns (left/right) by dragging column by its heading. I like to put the iCloud Download column next to the Name column. You may also want to make the iCloud Status column visible.
If the iCloud Download column has a cloud with down-arrow symbol, it means that movie is not stored locally. The iTunes library is accessing the video file (if you play that movie) from iCloud. Therefore, it is not taking up any space on your computer's drive. But you can still play it by streaming from iCloud.
To free up additional space, you only need to look at movies that do not have a cloud with down-arrow symbol. If it's a Purchased item, right-click it and select Remove Download (not Delete). The movie remains on the list, now with a cloud with down-arrow symbol. If there is no Remove Download command (only Delete) for a movie, that is an item you cannot re-download, so you may not want to Delete it (unless you don't want it anymore).
