The error is related to the privileges of the user account. The error occurs if the SYSTEM group does not have Full Control privileges or The Everyone group does not have Full Control privileges.

Unable to set new Owner on OS, Access is denied

If you’re faced with this Unable to set new Owner on OS, Access is denied issue, then you need to take ownership of the folder and then grant permission to everyone. But before you begin, restart your PC once and try again and see if that works for you.

Take ownership of the folder and then grant permission to everyone

Before taking file or folder ownership, it’s recommended you create a new system restore point so that the system may be reverted back in case of any loss of data or irregular behavior. After you have successfully taken file of folder ownership, you can proceed as follows to grant permission to everyone:

Navigate to C:\Users.Right-click on folder and choose Properties.Then go to Security tab.Click Edit.Click Add > Advanced.Now click on Find Now and choose Everyone.Click OK.Click OK again.Now click on Allow > Full control > OK.

This post gives full details on how to take file or folder ownership.

If the issue persists, you can create a new user account with administrator rights and then try to perform the changes and check if the steps work for you. If nothing helps, you may want to use the Fresh Start/Reset option ensuring that you opt for the Keep files and data option. Related reads:

Unable to display current owner on WindowsRemove Access Denied error when accessing files or folders.

All the best!