First of all this is a bug somewhere on play store side so I think we can only get a work around not an actual solution, said that I solved freeing more space than it would be theoretically needed, using old version of play store works too.
As for how much space is needed I don't have a clear answer because my phone (also on android 4.2.1 and MTK based) is rooted and I symlinked some apps to a different partition to be able to use more than 1.5GB as internal storage (that's data size partition in my phone). So I think this causes some problems on size estimation because Manage apps says I have 491MB free (correct)
but Settings->Storage says I have 195MB Available (not correct).
You can try removing some apps, I think 180MB free should do.
As for the black border I've had that problem since some months, I didn't dig much on the issue but I think they changed image format (new one is webp) and the transparency layer is not working well in our phones.
This version is out one month already but updates roll out not at the same time for everybody, if you want to try it you can update it manually downloading the apk from a trusted source like: http://www.androidpolice.com/2014/07/22/google-play-store-update-4-9-13-adds-material-design-app-and-content-pages-apk-download/
For images problem look here: https://productforums.google.com/forum/m/#!topic/nexus/tw1FebzJQng Looks like from Google the only answer is to ask manufacturer to update to KitKat.