Win2008 Backup Failure: Volume Shadow copy operation failed for backup volumes with following error code '2155348129'

I recently performed a clean install of Win2008 x32 and have been trying for several days to get the Windows Backup program to work on my system drive C: (hardware RAID 5 - Intel Embedded Server RAID II on S5000PSLSAS with 3- 146GB 15K drives. I updated all drivers/bios from Intel before the install).

I have a removable SATA drive (500GB) which the Windows Backup program cleared for backups. I later assigned drive X: so I could see what was being placed on the drive (e.g. X:\WindowsImageBackup\APICELLA\Backup 2008-08-18 015309).

These are the things that do work using the Backup Once Option:

1) Backing up 100GB from an IDE Drive B: - no errors. Data appears on X:

2) Backup up 100GB separate RAID Array D: (I have two separate RAID arrays on this machine) - no errors. Data appears on X:

3) Problem: Everytime I chose to backup C: I get this error message: Backup started at '8/18/2008 1:55:08 AM' failed as Volume Shadow copy operation failed for backup volumes with following error code '2155348129'. Please rerun backup once issue is resolved.

Event Viewer:
- System
  - Provider
   [ Name]  Microsoft-Windows-Backup
   [ Guid]  {1db28f2e-8f80-4027-8c5a-a11f7f10f62d}
   EventID 521
   Version 0
   Level 2
   Task 0
   Opcode 0
   Keywords 0x8000000000000000
  - TimeCreated
   [ SystemTime]  2008-08-18T01:55:12.764Z
   EventRecordID 962
   Correlation
  - Execution
   [ ProcessID]  3032
   [ ThreadID]  3852
   Channel Application
   Computer APICELLA
  - Security
   [ UserID]  S-1-5-18

- EventData 
  BackupTime 2008-08-18T01:55:08.427Z
  ErrorCode 2155348129
  ErrorMessage %%2155348129

I have turned on Shadow Copying all both drives C: and X:.

Any suggestions?

- Pete