Absolutely you have a case for small claims court. Anyone with a 2017 MCU1 car has a case, even if they didn't buy FSD, because they may want to subscribe to FSD (which was my case). But you actually have PAID for FSD.
I would make an appointment for the MCU2 upgrade. In your appointment request, specify you want it so you can run FSD-Supervised (note it's no longer considered "beta").
Once the quote comes for your approval, again request them to waive the cost since your car was sold to you with the promise that it included "all the necessary hardware for full self driving" which is obviously not true.
It may help to include screenshots of these claims/advertising from the Tesla website in the month or 2 ahead of when you bought the car. These can be found on the internet archive (aka "wayback machine").
When they refuse to comp you the upgrade, file for small claims per the OP instructions of this thread.