UPDATE: Thank you Dima, yes, neither chkdisk F nor R report any issue - no errors. DISM found no issue. sfc /scnannow - nothing. Acer's diagnostics found no error. I have since tried Seagate Seatools on it, which did find an error but could not repair it. Then I have noticed in Windows Event Viewer ->Windows Logs->System: "The device, \Device\Harddisk0\DR0, has a bad block." This error was there starting exactly when Veeam started failing. EVERY windows tool or diagnostic shows the drives "healthy" and no errors except 'event viewer'! I am thankful that Veeam brought error this to my attention!
Asus wants to do a full wipe and restore, so I have done file level backup of my content as a safeguard, I am now off to tweak that registry key to force an "entire computer" backup to complete.