Hi Steven,
It is possible that the size of the system image getting created is more than the free space you are having. Refer to the below mentioned link on system image back up and check if this helps.
http://blogs.technet.com/filecab/archive/2009/10/31/learn-more-about-system-image-backup.aspx
You can also check if you are getting any errors in the Event viewer. To open event viewer follow the below mentioned steps:
- Click the Startbutton then click Control Panel in thisclick System and Maintenance.
- Now click Administrative Tools, and then double-click Event Viewer. If you are prompted for an administrator password or confirmation, type the password or provide confirmation.
- Click an event log in the left pane.
Double-click an event to view the details of the event.
If the hard disk does not have enough space, then I will suggest you to use disk clean up utility to delete the files that are not essential to you : Delete files using Disk Cleanup
Hope this helps.