Dear Richard.Taylor,
I have the same problem. I own an M3 MacBook Pro 14-inch since November 2023. There is over 600 GB available space on my hard disk. Photos worked perfectly until I upgraded my MacBook Pro to Sequoia. Now it would not save any edits, even the most basic cropping and/or rotating. I am an old-fashioned guy, so I open Photos by clicking on the Photos icon in the dock. I double-click on a selected photo in my library, then click on edit button. I crop, straighten, adjust light, colour, white balance, etc. I even tried a new Clean Up tool since Retouch tool disappeared with this upgrade. When I am done, which often takes up to a 20 minutes per photo — I click Done; the photo still looks fine even when I minimise it to a thumbnail size in Library. My Library instantly synchronises all photos. Next time I double click on the photo I edited, to enlarge it — it is reverted to the original unedited version and I have wasted 20 minutes for nothing. My machine is new, I had no problem with Photos until this upgrade. I do not use "Optimize Storage" as I have plenty of space, which I mostly use to keep photos on my hard disk in its original size. My Photos Library is in the Pictures folder on my hard drive. There is still more than 60% of disk storage free.
I am getting increasingly frustrated with Apple's "improvements". Every time they come up with something new, we will have lost something that we liked and were happily using up until the "improvement"...