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For some reason, I am unable to partition my SSD.

Disk Utility reports a small amount of disk space, but this is a known issue to do with local snapshots:

Note: You may notice a difference in available space statistics between Disk Utility, Finder, and Get Info inspectors. This is expected and can be safely ignored. The Finder displays the available space on the disk without accounting for the local snapshots, because local snapshots will surrender their disk space if needed.

I actually have plenty of free disk space:

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up vote 3 down vote accepted

You can disable local snapshots with sudo tmutil disablelocal (and then you may have to wait a while for all of them to be deleted and the space freed). I'm not certain that's the entire problem, since the error ("The target disk is too small for this operation") isn't what I'd expect to see for a lack of free space issue. But it's worth a try...

I'd also be sure to update your real backup before turning off local snapshots and/or repartitioning. And when you're done, be sure to turn local snapshots back on with sudo tmutil enablelocal

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Waiting to see if that space clears up. Restarted a few times and toggled Time Machine off and on, it's still reporting 16.8 MB free space :/ Here's a what I get if I run diskutil list in terminal if it's any help: cl.ly/image/1q2Q0a2J3N1O/content –  Oliver Joseph Ash Jan 8 '13 at 13:37
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The reason for the error is perfectly clear from the screenshot. If you look at the bottom, you'll see "Type: Logical Volume Group" there. I guess you have a FileVault 2 encrypted disk and Disk Utility in 10.8 isn't able to resize that (at least in GUI). You can do that perfectly well from the terminal (be sure you've backed up everything before doing this):

diskutil cs list
diskutil cs resizeVolume <volumeID> <size>
diskutil cs resizeDisk <physicalVolumeID> <size>

You can get all the ids from the diskutil cs list invocation. (More on the CoreStorage commands here: http://cartera.me/2011/08/14/practical-corestorage/)

Please note that physical volume size should be slightly larger then logical volume.

After that Disk Utility still won't be able to create new partition in the free space, for that you'll need gpt and booting into live USB OS X installation to partition the unmounted disk. But that actually is another question.

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