When you try to perform a system state backup to a volume on which the system state file resides, you receive an error, as mentioned below:
In Windows Server 2008, you receive the following error:
In Windows Server 2008 R2, you receive the following error:

CAUSE
This behavior occurs because system state backups to critical volumes are blocked in Windows Server 2008 and Windows Server 2008 R2.
RESOLUTION
You can change the default behavior of Windows Server 2008 and Windows Server 2008 R2 by adding a registry entry. You must also verify that the following prerequisites are met before you perform a system state backup to a critical volume.
Prerequisites to perform system state backups to critical volumes
- Make sure that the target volume has no shadow copy before the backup starts.
- If a system state backup is stored on a source volume, backup settings should be configured for full backups. By default, settings are configured for full backups.
- Periodically check that no other user or program maintains a shadow copy on the target volume.
- Do not keep volume level backups and system state backups in the same location.
- The volume used to store the system state backup needs twice the amount of free space as the size of the system state backup until the backup completes.
Notes
- Any writes on target volume with shadow copies will increase the diff area size. If the diff area is bounded, it may cause deletion of shadow copies.
- Incremental backups leaves shadow copies behind, it will cause side effect as point 1.
- Backup stores different versions as shadow copies, it will cause side effect as point 1.
Registry entry to enable system state backups to critical volumes
Warning Serious problems might occur if you modify the registry incorrectly by using Registry Editor or by using another method. These problems might require that you reinstall the operating system. Microsoft cannot guarantee that these problems can be solved. Modify the registry at your own risk.
To enable the system state backup files to be targeted to critical volumes, you must set the value of the AllowSSBToAnyVolume registry entry under the following registry subkey:
HKEY_LOCAL_MACHINE\SYSTEM\CurrentControlSet\Services\wbengine\SystemStateBackup\
Set the value of this entry as follows:
Name: AllowSSBToAnyVolume
Data type: DWORD
Value data: 1
Note When this value is set to 1, system state backups to any volume are enabled. To revert to the default behavior, set the value to 0.
https://support.microsoft.com/en-us/kb/944530
See attached doc...