sophisticatedstorage-1.20.1-0.10.20.778
sophisticatedcore-1.20.1-0.6.18.597
Forge 47.2.20
Limited barrels with compression upgrade don't seem to work with Storage Controller.
When inputting blocks and nuggets into storage controller it will not input into a limited controller barrel with compression upgrade will only accept item if empty. Have tried with various tiers of barrel. If there is a full stack of blocks of a item in the limited barrel the storage controller will not accept the block or nugget form of the item them and will shunt them into a free spot if available. It will however accept ingots and only ingots into the limited storage barrel. Acts in a similar manner if compression upgrade is put into a chest and has item like smelted iron in the compression slots.

I am unable to recreate so I will need description of your setup / steps to recreate.

What I am doing is basically limited barrel with compression upgrade, put iron ingot in it so that it shows both block and nuggets. Now I have controller next to it and hopper pointing into it and hopper will happily insert iron block despite there being none in the barrel yet (because it only has 1 ingot in it).