Placement cannot find a legal solution

Your kernel is very close to overutilizing the Block RAMs even with v17.0. I did some quick test on v17.0 some time ago and noticed that it seems to be reducing Block RAM utilization compared to v16.1.2 for the same kernel; this is probably the reason why your kernel does not fit with 16.1.2, but fits with v17.0. Though the area reduction might be because of Altera slimming down the BSP in v17.0, opening more room for the kernel to be placed on the FPGA, rather than improvement in the OpenCL compiler. In my experience, v17.0 unfortunately decreases performance for the same kernel by up to 30% compared to v16.1.2, so you might want to check the actual performance you achieve before switching to this version.