SQLWriter Non-Retryable Error State?

I have an issue with the SQLServerWriter VSS in a state: 8 Failed and last error a 'Non Retryable error'.

Whenever I try to use Windows Server backup to create a full system recovery image, it fails and BackupExec 12 cannot access our databases and fails also.

Quick run down of system in question:

- Windows Server 2008

- 2 X SQL 2012 BI instances

- 2GB RAM

Error event id's:

- 18210, 3041, 24583

Sqllib error: OLEDB Error encountered calling ICommandText::Execute. hr = 0x80040e14. SQLSTATE: 42000, Native Error: 3013
Error state: 1, Severity: 16
Source: Microsoft SQL Server Native Client 10.0
Error message: BACKUP DATABASE is terminating abnormally.
SQLSTATE: 42000, Native Error: 3202
Error state: 1, Severity: 16
Source: Microsoft SQL Server Native Client 10.0
Error message: Write on "{C0C35EF6-6FD4-4CC7-A0D9-2A361E783FBB}182" failed: 995(failed to retrieve text for this error. Reason: 15105)