Windows could not start block level backup engine service

Hello,
              Im
 trying to perform system state backup for one of the server its unable to run. Last week we have performed the system state backup without any issue.
Operating System:2008
OS Version: R2 Small Business Server 2011 x64 Edition Build 7600
RAM-32 GB
Following event ID is reported in the logs;
Log Name:      Application
Source:        Microsoft-Windows-Backup
Date:          7/2/2013 2:25:35 PM
Event ID:      754
Task Category: None
Level:         Information
Keywords:     
User:          SYSTEM
Computer:      ABC
The Block Level Backup Engine service has stopped.
When we try to restart the Block Level Backup Engine service we get error as “Windows could not start the Block Level Backup Engine Service on Local Computer.
Error 0x800700b7: Cannot create a file when that file already exists.”
I have already restarted Virtual disk and Volume shadow copy service, but no luck.
Any help in resolving this issue will be much appreciated.
Thank you.
Keshava

All,
Here is the solution which worked for me ;
Services.msc >properties page of Block Level Backup Service Engine
Changed to Log On tab
Instead of Log On as Local System Account changed to Log On as
[email protected] (select the account with admin creds), entered the password of admin and closed the properties page.
Now restart the Block Level Backup Service Engine and re-run the job, backup completes without any issue.
Thank you
Keshava

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