After many tries at the solutions listed here I found a way to fix my problem. I continually got a failure basically saying the system could not create a shadow copy or that my drive had a failure. It seems with Windows 7 you have to configure some options that are not apparent to users.
- go to control panel/system/System Protection and select your C: drive.
- Select "configure" and make sure "Restore system settings and previous versions of files" is on.
- Set Max Usage to at least 2%
- Apply
- Select your USB drive you will be using for backup and again Configure it for protection and set the file size to at least 18%.
- apply
- back in the control panel go to Administrative Tools, open Services.
- Scroll down to Windows Backup and make sure it is set to Manual and not started.
- Scroll to Volume Shadow and make sure it is also set to Manual and not started.
- Go back to the control panel, select Backup and Restore.
- Click "Change Settings" and select the drive you will be backing up to.
12 Run backup letting the system do it's thing and all should work.