I recently ran into a weird situation in which the Google Drive desktop app was complaining about there not being enough space to add a folder to my selective sync options. It made no sense. I had at least 100 GB of free space on my drive, and I wanted to additionally sync only another 3 MB in one subfolder.
How could an additional 3 MB take up more than 100 GB of space?
Well, it turns out there's a bug in Google Drive. The first time you do a selective sync, the trash storage isn't taken into account when Google Drive compares it to the free space on your local drive. But in subsequent changes to your selective sync, the trash storage is taken into account, so if you have a lot in your trash, you can't modify your selective sync.
I've reported the bug to Google. In the meantime, if you run into this issue, empty your Google Drive trash (through the web browser, not the app), and then wait about 24 hours. You should then be able to modify the selective sync again.