I was able to get windows 7 backup to finally work by doing the following:
The error message which I was receiving after windows 7 backup failed was:
A shadow copy could not be created. Please check "VSS" and "SPP" application event logs for more information. The specified object was not found. Error code: 0x81000019
My hard drive has a C and D partition. I am not sure if it was step 1, 2 or 3 below or a combination of all 3 steps that fixed my problem. I would start with step 1 then try to run backup. If that does not work procede to step 2 and try running backup again. If that still does not work go to step 3. I excecuted all 3 steps prior to attemting my backup so I am not sure which one of the steps actually fixed the problem or if it was a combination of all 3 steps. All these steps together is now allowing me to backup via the windows 7 backup feature. Hopefully the solution will hold up long term.
Step 1:
I ran diskclean on the C and D drive partitions
Step 2:
Right click on computer
Properties
System Protection
Highlight D drive
Click Configure
Click delete all restore points
Step 3:
Right click on computer
Properties
System Protection
Highlight C drive
Click Configure
Click delete all restore points