Windows 7 Backup is failing. When backing up even a single insignificant directory (e.g. I chose only the empty "Contacts" directory, leaving all other directories unchecked), I get this error within a few seconds and the backup fails. If I uncheck all files/directories, and just do the system image - then the system image is backed up OK without issue.

Backup destination is an external USB hard drive.

Steps to reproduce and subsequent failure:

1. Set up backup to go to external hard drive. Don't back up system image. Back up "Contacts" directory only for my profile.
2. Start backup.
3. Immediately view the status of the backup, it stays on "Creating a shadow copy..." for a few seconds, and then the backup fails.

4. Click Options button, and it says "Check your backup / The system cannot find the file specified." - with options to "Try to run backup again" or "Change backup settings". If I click "Show Details", then it says:

   Backup time: 4/12/2012 04:38
   Backup location: My Book (D:)
   Error code: 0x80070002
   

5. An examination of the Event Log shows nothing useful beyond the following:

   Log Name:      Application
   Source:        Windows Backup
   Date:          4/12/2012 04:38:44
   Event ID:      4104
   Task Category: None
   Level:         Error
   Keywords:      Classic
   User:          N/A
   Computer:      JTJLaptop
   Description:
   The backup was not successful. The error is: The system cannot find the file specified. (0x80070002).
   Event Xml:
   <Event xmlns="http://schemas.microsoft.com/win/2004/08/events/event">
     <System>
       <Provider Name="Windows Backup" />
       <EventID Qualifiers="0">4104</EventID>
       <Level>2</Level>
       <Task>0</Task>
       <Keywords>0x80000000000000</Keywords>
       <TimeCreated SystemTime="2012-04-12T04:38:44.000000000Z" />
       <EventRecordID>23979</EventRecordID>
       <Channel>Application</Channel>
       <Computer>JTJLaptop</Computer>
       <Security />
     </System>
     <EventData>
       <Data>The system cannot find the file specified. (0x80070002)</Data>
   <Binary>02000780E30500003F0900005B090000420ED1665C2BEE174B64529CB14610EA71000000</Binary>
     </EventData>
   </Event>
   

What I have tried:

• ChkDsk on both C: (main drive) and D: (backup drive) doesn't find any errors.
• Running SFC /SCANNOW to run system file checker
• Checked the list of profiles at HKEY_LOCAL_MACHINE\SOFTWARE\Microsoft\Windows NT\CurrentVersion\ProfileList and ensured that each profile directory exists.

I'm stumped; WHAT file can't be found and why is my backup failing?

This is on a Lenovo T420 laptop.