You may encounter a similar error when back up to a sub directory:
Executed as user: SW\DALSQL. Imceda slssqlmaint Utility. Logging on to SQL Server 'AMALNSQLCT3\P3' with Windows Authentication Logged on to SQL Server 'AMALNSQLCT3\P3' Starting maintenance plan 'TLog_UserDBs_LS' on 10/17/2006 1:08:25 PM  Database K2: Transaction Log Backup... Exception - [MP003] - Unable to create backup sub directory "Y:\MSSQL.2\Backup\K2". F:\Program Files\Microsoft SQL Server\MSSQL.2\MSSQL\Binn\slssqlmaint.exe Process Exit Code: 1 (Failed) [SQLSTATE 01000] (Message 0) slssqlmaint failed [SQLSTATE HY000] (Error 50000). The step failed.
Insufficient permissions to the folder.
Add a LiteSpeed user with rights to the directory where the database is located. As a suggestion, use Everyone or Administrator; granting full control under the login.