Windows Server Backup Problems

I've got a bit of a problem here that I have inherited. Currently, I have two Windows 2012 servers running.

• One server is a production server with 1 Hyper-V VM on it that has SBS 2008 on the guest VM.
• The other server is a standby server just in case the other server goes down, we can restore the production server to the stand by server.

On the production server:

There are 3 disks with two drives C: and D: on separate disks and a third disk that has an unformatted disk.

Windows Server Backup has been backing up to the standby server via UNC path. The backup gets stored put on a physical drive and then every night gets copied to an external drive to have a weeks worth of backups.

We had an issue a couple of days ago that an employee had deleted some info from a spreadsheet that we needed to recover. I went into Windows Server Backup and noticed that I could only recover the previous days backup from the calendar. Unfortunately, every time I try to view the files, restore vms or anything like that, it says that windows backup cannot find the backup set media.

Ever since I tried to recover the files, the backups are now failing. I am getting this error:

The backup operation that started at
'‎2015‎-‎11‎-‎04T03:00:03.384015500Z' has failed with following error
code '0x8078014B' (There was a failure in creating a directory on the
backup storage location.). Please review the event details for a
solution, and then rerun the backup operation once the issue is
resolved.

I saw a couple of posts that say that it was a permissions issue but the directory permissions are set to everyone. So, I don't think it is that.

What can we do to fix this and what can we do to make the process better?

Best Regards, Edward Rhoades II