Attempting to replace my AC compressor on my 2006 AWD and finding trouble with space. Do I have to remove the Oil filter to make space?

 

If they did what Toyota often does, there *may be* studs securing the compressor which need removed. Idk, never done one.

If removing filter helps, by all means, do so. At least remove that bracket. The other option may be to remove the alternator?

Last option, not sure it helps - pull it out the side.
Remove the bolts to the engine mounts and slowly and carefully jack the engine up (place 2" x 6" between jack and oil pan). Try not to crush anything. Hopefully that gets you the space needed but I'm guessing that by the book you suspend the engine and drop the sub-frame.