Yeah, this happens a lot on Windows 11. Even if you have 120GB free, Disk Management can refuse to shrink C: because of "unmovable" system files sitting near the end of the partition. Common culprits are the pagefile, hibernation file, System Restore points, or NTFS metadata. Windows only shrinks from the end of the partition, so one stubborn file can block the whole operation and make "Shrink Volume" greyed out or severely limited.
You can try the safe stuff: disable hibernation (powercfg -h off), temporarily turn off System Protection, and reboot. You can also run a defrag/optimize pass on the drive (yes, even on SSDs, Windows will do proper TRIM optimization). And of course, make sure you back up important data first before resizing system partitions.