SBS 2011 Reserved Partition

There should be no need to back up the reserved partition, as it is not normally used.

A Microsoft Reserved Partition, or MSR, is a partition of a data storage device, which is created simply to reserve a chunk of disk space for possible subsequent use by the operating system software of a Windows operating system (Installed to a separate partition). It should be noted that no meaningful data is stored within the MSR; though from the MSR, chunks may be taken for the creation of new partitions, which themselves may contain data structures.

Excluding the MSR from the backup should solve the problem.

There is no option to turn off in BackupAssist.  The backup fails when attempting to backup System Reserved Partition.  I ran chkdsk on the System Reserved Partition and no errors were detected.  Can I format the System Reserved Partition?

no if you do your system will not boot. It contains the bcd store.  Change your backup product to Veeam Endpoint backup or something newer that knows how to handle the new items

Is this the system reserved or the diagnostic partition?

BackupAssist I believe is just a fancy front end for the M$ built in backup which can't backup fat partitions.

Can you post a screen shot of your Windows Disk Management?
I can remember that Windows Server Backup did fail due to the fact that MSR partition was filled up by some data. So you need to delete the vss snapshots (recovery points) from it first.
This is because VSS requires that a partition has at least 15% free space to take successful backup of it.

Other solutions suggested did not fix the issue.  Replaced WD external drives.