Backup Failure Please Help

I am having a backup issue currently that has worked for a year previous to this. Every night at 1:00AM I use the scheduler to backup 4 partitions on our server. A week or so ago I started receiving emails it failed, so I have to get up and manually do the backup.

It started off where Acronis would freeze for hours at "locking partition" and I would manually cancel the job, click the scheduled task and run it again (this would run correctly after 2 or 3 tries). After researching and making sure there were no HDD errors I decided to install SnapAPI.337_s_e.msi.

After installing SnapAPI.337_s_e.msi I now receive an error "Cannot access drive.
Cannot create the image of the logical drive D: because it is currently in use by running applications or the logical drive contains bad sectors.: None"

Even if I remove the D drive from the partitions backed up, it just picks the next drive letter in line to be backed up and errors the same for that drive letter.

I tried to click the scheduled task and run it, but this gave the same results repeatedly. I deleted the task and recreated it with same error. I then decided to not use the scheduled task and just try it manually by clicking on "Backup". This works successfully.

Other than installing the SnapAPI driver update, I I disabled the VSS. After this didnt help I enabled it again. I am not sure where to turn next.
Please help. Also I am convinced this isnt HDD errors as it works flawless manually.

Environment: Win2k3 Enterprise SP2. Acronis TrueImageService.exe, version 9.1.0.3854.