The log entry “Error Creating Hard Drive Snapshot” indicates a ‘fatal VSS’ issue in the VSS system of Windows. Without a valid snapshot of the hard drive, BackupChain cannot proceed.
To inspect the Windows Event Viewer logs, see Troubleshooting Volume Shadow Copy Errors: First Steps
In the case of Hyper-V being used, make sure you also check the Hyper-V logs shown the above article at the bottom.
In addition, you could use VssDiag™ Volume Shadow Copy Service Diagnostics Freeware to find error entries for you. Note that you need to enter the exact time and date in U.S. time format as shown in the screenshot of the VssDiag page. The tool will limit its search to 10 minutes within the time specified.
Most often, as in Hyper-V backups, the VM and/or Hyper-V may veto live backup for hundreds of different reasons. Almost all the time, the exact reason is logged by Hyper-V in its own logs shown in the troubleshooting article. In the majority of the cases the Hyper-V Integration Service version is outdated.
Steps for Hyper-V Backup for Windows 8 / 8.1 Client Hyper-V and VHDX (same steps work on Windows Servers)