SBS 2011 - Backup fails

Hello experts,
This issue is on a MS Small Business Server 2011. Backup fails to complete no matter what changes are made to the backup configuration. Formatting the backup location, changing the type of back up from incremental to full, stopping schedule and rescheduling with new external drive... The error message that is given from the back up console is 'The operation was stopped. Detailed error: the volume shadow copy operation failed with error 0x800423F0. View the event log for more information'. Then when I go to the event log under Server Roles>File server, I have this error:
-----------------------------------------------------------------
Log Name:      Application
Source:        VSS
Date:          3/17/2011 10:23:58 AM
Event ID:      8193
Task Category: None
Level:         Error
Keywords:      Classic
User:          N/A
Computer:      h.local
Description:
Volume Shadow Copy Service error: Unexpected error calling routine CoCreateInstance.  hr = 0x80040154, Class not registered
.
Operation:
   Instantiating VSS server
Event Xml:
<Event xmlns="http://schemas.microsoft.com/win/2004/08/events/event">
  <System>
    <Provider Name="VSS" />
    <EventID Qualifiers="0">8193</EventID>
    <Level>2</Level>
    <Task>0</Task>
    <Keywords>0x80000000000000</Keywords>
    <TimeCreated SystemTime="2011-03-17T14:23:58.000000000Z" />
    <EventRecordID>25434</EventRecordID>
    <Channel>Application</Channel>
    <Computer>h.local</Computer>
    <Security />
  </System>
  <EventData>
    <Data>CoCreateInstance</Data>
    <Data>0x80040154, Class not registered
</Data>
    <Data>
Operation:
   Instantiating VSS server</Data>
    <Binary> !Removed If needed can repost!
----------------------------------------------------------------------------
This error too:

Log Name:      Application
Source:        VSS
Date:          3/17/2011 10:32:16 AM
Event ID:      8230
Task Category: None
Level:         Warning
Keywords:      Classic
User:          N/A
Computer:      h.local
Description:
Volume Shadow Copy Service error: Failed resolving account spsearch with status 1376. Check connection to domain controller and VssAccessControl registry key.

Operation:
   PrepareForSnapshot Event

Context:
   Execution Context: Writer
   Writer Class Id: {afbab4a2-367d-4d15-a586-71dbb18f8485}
   Writer Name: Registry Writer
   Writer Instance ID: {8fd4b2fb-a379-4ea0-8079-a4c9f1873267}

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

Event Xml:
<Event xmlns="http://schemas.microsoft.com/win/2004/08/events/event">
  <System>
    <Provider Name="VSS" />
    <EventID Qualifiers="0">8230</EventID>
    <Level>3</Level>
    <Task>0</Task>
    <Keywords>0x80000000000000</Keywords>
    <TimeCreated SystemTime="2011-03-17T14:32:16.000000000Z" />
    <EventRecordID>25455</EventRecordID>
    <Channel>Application</Channel>
    <Computer>H.local</Computer>
    <Security />
  </System>
  <EventData>
    <Data>spsearch</Data>
    <Data>1376</Data>
    <Data>
Operation:
   PrepareForSnapshot Event
Context:
   Execution Context: Writer
   Writer Class Id: {afbab4a2-367d-4d15-a586-71dbb18f8485}
   Writer Name: Registry Writer
   Writer Instance ID: {8fd4b2fb-a379-4ea0-8079-a4c9f1873267}
Error-specific details:
   Error: NetLocalGroupGetMemebers(spsearch), 0x80070560, The specified local group does not exist.
</Data>
    <Binary> !Again, removed the binary, If needed please advise, and I'll repost!
------------------------------------------------------------------------------------

There are more errors and warning in the list. Not sure if these will give you enough to go on.? If more are needed please let me know and I can post them too.
Also, I have uninstalled and reinstalled the Back Up Feature from Server Manager, but that didn't work either... Please point me in the right direction to get this resolved.
Thanks in advance for your help!!!