You cannot back up a file in Windows 7 if the path length is longer than 260 characters

[Symptoms]

Consider the following scenario:

• You customize a backup operation to back up some files on a computer that is running Windows Server 2008 R2 or Windows 7.
• You select some files that you want to include in the backup operation. The path length of one selected file is longer than 260 characters.

In this scenario, the backup operation fails after the backup operation is started. Additionally, the following event is added to the Application log:

Log Name: Application
Source: Microsoft-Windows-Backup
Event ID: 547
Task Category: None
Level: Warning
Description:
The backup operation that started at time has encountered errors for the volume(s) volume. Log of files not successfully backed up.

[Cause]

This issue occurs because the Windows Block Level Backup Engine service (Wbengine.exe) handles file paths that are longer than 260 characters incorrectly.

[Resolution – Download hotfix]

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Post from Microsoft: KB982502