Windows Backup has been failing consistently. I would occasionally recieve an error message in my application logs on Windows 7:
Faulting application name: svchost.exe_SDRSVC, version: 6.1.7600.16385, time stamp: 0x4a5bc3c1
Faulting module name: PGPsdk.dll_unloaded, version: 0.0.0.0, time stamp: 0x4f6c30d9
Exception code: 0xc0000005
Fault offset: 0x0000000059f0090c
Faulting process id: 0x151c
Faulting application start time: 0x01cdf293db4fec2c
Faulting application path: C:\Windows\system32\svchost.exe
Faulting module path: PGPsdk.dll
It appears that Windows backup shadow copy was failing as it tried to access files in the root of the drive..the C:\ and the backup fails. The files which seemed to be killing the backup were:
PGPWDE00
PGPWDE01
PGPWDE02
Telling windows to skip the root directory appears to have solved this problem.