The amount of free space (148GB) in your case for your data files generally has nothing to do with the space the My Cloud OS needs to perform a firmware upgrade (or downgrade). To properly downgrade there are several ways to do so. See the following thread for one such method. See the thread following that one for links to prior/current firmware to ensure your using the appropriate firmware for your My Cloud.
http://community.wd.com/t/easy-method-to-downgrade-to-previous-version-of-the-firmware/93489
http://community.wd.com/t/wd-my-cloud-v4-x-and-v2-x-firmware-versions-download-links/148533
