NT Backup 'An inconsistency was encountered in the requested backup file.'

Hello - I think I may just need some clarity on how this process works, but it seems as if every time I do a windows update on our server, the backup starts to fail. I get the following message in the Event Viewer - 'An inconsistency was encountered in the requested backup file.' Some how, it does end up fixing itself in time...

I have read in other posts of the 36GB limit. Our server has a total of 67.0 GB Storage (Raid 10) with 38.2GB used and 28.8GB free. I have the backup pointed to store the .bkf file on a computer that's running Windows XP SP3 on a hard drive that has 209GB total space with 89.4GB free and 119.4GB used (that is with 3 .bkf files that rotate every backup).

My first question to try and resolve this is - Does the server make the compressed backup file on the server's hard drive first, and then copy it to the destination drive? That would make sense as to why it's failing as our backup file is 31.4GB and growing, but that wouldn't explain why it eventually starts to work.

My second question is - Is NT Backup junk? Should I be looking for a better program to use?

Thanks,
Andy