Window 7 will can not Backup or let me do a system image backup.

I am having this EXACT same problem as RYANSMCC and did the exact same thing- went and spent money on a WD 500GB portable  hard drive. No matter what I do it says NEED 26GB, HAVE 500GB, then it starts, then it errors out and says insufficient space. I reformatted, partitioned the external drive, and bit my nails. Thinking it might be the hard drive I went to ANOTHER computer running the exact same version of WINDOWS 7 professional (both machines had a clean install from VISTA, both Sony VAIO both with ZERO firmware) It worked perfectly on the other computer. Both machines were fresh from the clean install. It is BAFFLING! Now I will go buy third party software! What software should I use? Suggestions?

Windows 7 Ultimate backups to an external HDD are always failing after upgrade from Vista Home Premium was successfully completed (using a purchased hard disc).  Backup usually stalls at 7% (two or three times it incremented to 57%) and then falls over giving error message: “A shadow copy could not be created. Please check "VSS" and "SPP" application event logs for more information. Error code 0x81000019”.  After six hours (over three days) of diligent assistance from Microsoft Support Helpline, and having checked out and tried EVERYTHING as instructed, it was suggested that we could try a clean install.  However, as doing that would mean reinstalling all drivers, etc., etc., and as I am able to backup using (Microsoft approved) vendor software, and as everything else seems to work, I decided that it ain’t worth any more hassle. The case reference remains open and is being reported upwards.  Maybe eventually Microsoft might release a patch to fix this Windows 7 ‘not fit for purpose’ backup code.

Brand new Sony Vaio (1 week old) with 30GB of total used drive space, came pre-loaded with Windows 7 Home Premium with all the latest updates installed.

I was able to create system repair disks, however when I attempted to create backup(s)s to DVD's, even though it SAYS it can back up to multiple DVD's, it fails, reporting insufficient space- even when only backing up (minimal) user data, let alone attempting a system image.

I then purchased a WD 500GB external drive (formatted NTFS) thinking it needed a single volume of sufficient size. No matter what settings I use (Windows managed or let me choose), system image or not, it fails around 2% with following error (typed out because can't paste a screen print): 

(RED X) Check your backup  A shadow copy could not be created. Please check "VSS" and "SPP" application event logs for more information. Details: Insufficient storage available to create either the shadow copy storage file or other shadow copy data.    Error code 0x81000019

There is no "SPP" application log, the VSS and Backup application event logs gives the exact same information disclosed on the GUI error screen.

I am able to view the external drive and transfer files to/from via Windows Explorer, so the hardware is working fine.

Any guidance or advice would be appreciated. Thanks!

I'm having the same problem with my ASUS laptop backing up to a WD 1.5TB extrnal drive. I look everywhere on the Microsoft site but no answers. I'm running Windows 7 Home Premiun 64bit recently upgraded from Vista Home Premium.  I hope MS comes up with an answer soon.