Has anyone had any success running Windows Backup in server 2008?
I want to run a script that will backup the C drive (OS) once a week and then the D drive (Files & Folders) daily.
I tried using Windows backup but it only allows for daily backups.

When I run from cmd line I get the following error, and yes the user account has the correct group memebership.

ERROR - Access denied. You must be a member of the Administrators group or
Backup Operators group to use Windows Server Backup and you must run WBADMIN
With elevated privileges. For example, open the Command Prompt with the Run as
Administrator option and then type WBADMIN <command>.

Honestly there are two ways of doing backups.
The Micro$oft way or the correct way.

Personally I don't touch M$ backup after having serious problems with 2000.
Since then I have used Veritas Backup Exec.
Works like a dream.

It deals with the whole system state (OS) easily.

I must admit I'm not really to sure why you are trying to use M$ backup for the OS at all. This could well be your problem here.