Working backwards...
Yes, redundancy increases the size of the archive. If you selected the default redundancy level (1:8) then every eight K of data is accompanied by an additional one K of redundant information, making everything you store 12.5% bigger.
There are also meta data, index files, and other database related information in the archive which makes it bigger than the actual file data. But that typically doesn't account for more than a couple of percentage points.
The "insufficient free space" message is the compact action trying not to waste time and endanger your data by moving it around pointlessly. The compact action won't physically compact the archive unless at least 12% of the archive's database file is empty space. This prevents the compact action from moving hundreds of Gigabytes of data, only to recover 4K. You can adjust this threshold in the advanced settings ("Compact Free Space Ratio Minimum"), or you can run the compact from the QRecall menu: open the archive in the browser, then choose Archive > Compact. When run from the menu, it ignores the free space ratio.
But while you have the archive open, make sure you navigate to the root of the archive to make sure you don't have any other owners or volumes that might contain older versions of data. If you do, consider deleting the older owners/volumes (before compacting).
Finally, if you want the smallest possible archive size for files you're keeping for posterity, consider turning on compression in the archive's settings. If you up the compact compression level, then compact the archive, the entire archive will be compressed. (Note it only does this once, and once compressed it won't uncompress or recompress the data). If you still need even more space back, consider reducing the redundancy level.
I hope that helps!
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