Check the Get Info to ensure that it’s formatted as FAT16.
Does the app now work properly when your looper is connected to your Mac Studio?
If it does, it looks like you’re in business
Mine also shows the same free space. I’ve often wondered why there’s not more space available and just wrote it off to having invisible files or space available in hidden partitions.
If you never intend to use the app or looper with a Windows PC, you could probably free up a small amount of space by deleting the PC folder but if it’s working now, it’s probably not worth messing around with.