I would suggest checking the event logs for VSS errors on the J drive.

Thanks ArneLovius. I just checked the event log again and it shows no errors.

I would try deleting all ahow copies on the H drive and then retry

to delete all shadow copies follow the below, note that the below will delete all shadow copies that the computer can enumerate, so do check each deletion

1) Open an elevated command prompt ("cmd" + ctl-shift-enter)
2) At the command prompt, type "wmic", after some time "wmic:root\cli>" will appear
3) Type "shadowcopy",  it will display a list of existing shadow copies
4) Type "shadowcopy delete"
5) One by one, it will give a "Y/N" style prompt, confirming the deletion of each individual shadow copy.
6) Type "exit" to get back to normal command prompt

Thanks ArneLovius. I followed the steps you listed out and deleted the shadow copy on the H drive and re-ran "create now" but still the same. Any other suggestions?

and there are no errors in the windows event log ?

This is the only error that I can find in the Application log (System log is clean)
I have been getting this error in the past few months but seems like this error doesn't affect shadow copies to function since all other drives on this server is getting shadow copies just fine. The H drive is the ONLY drive out of 3 having this problem.

Do you think this might be the reason?

Log Name:      Application
Source:        Microsoft-Windows-CAPI2
Date:          7/24/2012 11:09:42 PM
Event ID:      513
Task Category: None
Level:         Error
Keywords:      Classic
User:          N/A
Computer:      
Description:
Cryptographic Services failed while processing the OnIdentity() call in the System Writer Object.

Details:
AddCoreCsiFiles : BeginFileEnumeration() failed.

System Error:
Access is denied.

This is what I got when I ran vssadmin list writers. Looks like "Writer Name: 'System Writer" is missing. How can I fix this?

I also checked the ACL in C:\Windows\Registration is set correctly.

Microsoft Windows [Version 6.0.6002]
Copyright (c) 2006 Microsoft Corporation.  All rights reserved.

C:\Users\Administrator>vssadmin list writers
vssadmin 1.1 - Volume Shadow Copy Service administrative command-line tool
(C) Copyright 2001-2005 Microsoft Corp.

Writer name: 'ASR Writer'
   Writer Id: {be000cbe-11fe-4426-9c58-531aa6355fc4}
   Writer Instance Id: {5130e96b-58aa-41e2-abe4-c97efeec10d4}
   State: [1] Stable
   Last error: No error

Writer name: 'SqlServerWriter'
   Writer Id: {a65faa63-5ea8-4ebc-9dbd-a0c4db26912a}
   Writer Instance Id: {ce82aa30-3ce7-4d76-9825-44d8e0f2fd57}
   State: [1] Stable
   Last error: No error

Writer name: 'BITS Writer'
   Writer Id: {4969d978-be47-48b0-b100-f328f07ac1e0}
   Writer Instance Id: {27610bf5-8d34-47cb-b228-89ea44e2ced1}
   State: [1] Stable
   Last error: No error

Writer name: 'Registry Writer'
   Writer Id: {afbab4a2-367d-4d15-a586-71dbb18f8485}
   Writer Instance Id: {6a68c362-7d16-4186-8ba3-2f0a506172ea}
   State: [1] Stable
   Last error: No error

Writer name: 'WMI Writer'
   Writer Id: {a6ad56c2-b509-4e6c-bb19-49d8f43532f0}
   Writer Instance Id: {c83fb83e-1fb8-48b5-93f0-db540104dc2f}
   State: [1] Stable
   Last error: No error

Writer name: 'Shadow Copy Optimization Writer'
   Writer Id: {4dc3bdd4-ab48-4d07-adb0-3bee2926fd7f}
   Writer Instance Id: {bbb7ccb8-d213-4d1c-8ab4-109cc3986a20}
   State: [1] Stable
   Last error: No error

Writer name: 'COM+ REGDB Writer'
   Writer Id: {542da469-d3e1-473c-9f4f-7847f01fc64f}
   Writer Instance Id: {8e8c1de9-da4e-4496-9508-be01845cca87}
   State: [1] Stable
   Last error: No error