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SBS 2011 Backup Fails 0x800423F4 (VSS Issues)

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Any advice is much appreciated, I have now spent a day researching this.

PROBLEM: SBS 2011 Standard using the integrated backup software to a USB Hard Drive.

Backups fail with following info...

VSS Full Backup
Failed
A Volume Shadow Copy Service operation failed.
The operation was stopped.  Detailed error:  The volume shadow copy operation failed with error 0x800423F4.

Event Logs Show the following item 3 times (for Registry Writer, ASR Writer, and Shadow Copy Optimization Writer):

Volume Shadow Copy Service error: Failed resolving account spsearch with status 1376. Check connection to domain controller and VssAccessControl registry key. 

Error-specific details:
Error: NetLocalGroupGetMemebers(spsearch), 0x80070560, The specified local group does not exist.


FACTS:

* The backup works if I stop the service 'SQL Server VSS Writer.' State: [8] Failed Last error: Non-retryable error

* I have already run chkdsk /F

* I have tried assigning a drive letter to my USB backup drive as well as reformatting it

* I have already done http://support.microsoft.com/kb/2483007

* I have already run PSConfig.exe -cmd upgrade -inplace b2b -force -cmd applicationcontent -install -cmd installfeatures

OTHER INFO:

The backup quit working the same day updates KB2709162 and KB2676562 were installed.  I'm not sure if it's related but I would assume so.

I have read other things like changing the active volume, etc. but have not tried those items because they didn't seem relevant.

Thank you.




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