Quick update on this.
I was able to successfully backup the D: volume. After that I rebooted, changed the backup to the C: volume and received the same error. Not sure what to do from here.
Also, its probably worth mentioning, that I've been backing up the C: volume with a different product (storagecraft) and that has been working successfully. I only mention it in case the two products use the same underlying technology for backups (VSS?). That would potentially prove out that VSS isn't the problem with the error I'm receiving.
Thanks for the help and let me know what else I can try or if you need any more information.