This is a known issue with Microsoft that is documented in their KB Article ID 830575 - "Backup fails on a computer that is running Small Business Server 2003":
http://support.microsoft.com/default.aspx?scid=kb;en-us;830575&Product=sql2k.
To resolve this problem, re-register the SQLVDI.DLL file by following these steps:
1. Stop SQL Server.
2. Click Start | Run, type in Regsvr32 path\SQLVDI.DLL and click OK. The default path of the SQLVDI.DLL is C:\Program Files\Microsoft SQL Server\80\Com.
3. Restart SQL Server.