I received this error whilst using Backup Assist which in uses Windows Backup to backup the server there appears to be several things that can cause this error see this article
My particular problem was caused by trying to backup to a large usb hard drive (3tb) on a Windows Server 2008 machine see this article for more info the problem basically stems from the fact that only Windows 8 and 2012 natively support the 4k sector size installing sp1 will improve compatabilty with these drives but you still can’t do certain things with them and it looks like using them as a backup medium is one of them.
The way i overcame this problem was to format the drive using the tool that comes with the drive in my case it was a Buffalo drive using Advance Format 512e this creates a “Bytes Per Sector” value of 512 but the “Bytes per Physical Sector” value is 4096 originally the drive said it was 4096 for both.
To find what your drive is formatted as type the following at an elevated command prompt ‘Fsutil fsinfo ntfsinfo x:’ (x: is whatever your drive letter is you are checking) and check the values for Bytes Per Sector and Bytes Per Physical Sector values to find out what type of drive you have.
Another thing to note is not all manufacturers seem to have a format tool to allow you to format the drives as 512e so if using drives bigger than 2tb on anything less than Server 2012 its a minefield as to what drives will work.
I have found a drive that will allow you to format it using 512e sector sizes a 3TB Western Digital Elements drive