I searched the problem a bit more and finally got the Windows 7 Backup to work on my Windows 8 computer. Here is what I needed to do. I created a new share on the Western Digital Sentinel running Windows server 2008 Storage and set the permission to allow Everyone with Full Control on this share. I also allowed Everyone to have Full Control on the folder for this share. When I configured the Windows 7 Backup on my Windows 8 Pro computer, I still needed to provide a user ID and password. With these changes, the backup with system image was successful. Hope this will help.
This is the nut of the problem. Win 8 does not precisely recognize permissions as set under non windows operating systems. Microsoft has a long history of pushing proprietary MS only solutions in favor over generic industry wide standards. Nothing new here. It's just extremely frustrating for the end user who only desires to get the job done.