I never post to forums, but this one has my blood boiling!
Here's my fix, then I'll explain how I got there to save time for those that aren't bothered with the story.
I deleted 10's of Gb from the developer folders:
/(myuser)/library/developer/xcode/ios devicesupport/(device versions back to iOS7)
/(myuser)/library/developer/coresimulator/devices/(device GUID)
Viola!
So, I lost a day to this. 36Gb was not enough space, so I deleted some applications, but no joy.
Storage Management recommended that I delete large files, which it said were all in OneDrive. That's when I learned that you can't easily remove OneDrive (thanks Microsoft for your help here).
After downloading 30Gb of files in OneDrive, so that I could delete them locally, the free memory didn't increase. I should have known because cloud storage doesn't take up local space. This is a failing between Storage Manager and OneDrive, where one thinks the other is using HD space.
After losing a day, I paid for CleanMyMac, which pointed me to the Xcode folders above.
So let's get this straight: I can't install Xcode because Xcode has filled my computer with libraries for iOS 7-10 compatibility.
Apple, please do something about this. You charge enough for your development program that it shouldn't be this painful.