SBS Server 2008 Backups Are Failing: Event ID 25 - The shadow copies of volume C: were deleted because the shadow copy storage could not grow in time.

I need to get this issue resolved. I found another thread with lots of conversation but not a definitive solution.

I recently replaced 2 500GB drives in a RAID1 config with 2 1TB drives (also RAID1). I had to do a Bare Metal Restore as there was no way to perform the migration. Prior to that my backups to an external 1TB USB drive had performed perfectly. After doing the BMR the backups started having intermittent failures and the external drive was getting really full so I disabled the backups, reformatted the USB drive and recreated the backup. Now it fails every time with the above error.

I changed the write caching on the USB drive to the performance option and will need to reboot tonight before I can make sure Volume Shadow Copies aren't turned on for the backup destination drive.

TIA