So I ran debug on DC and get this.
[0384] 2012-08-14T10:11:15.421 [fsys\systemstate] - AD:Status performing account check for 2003 Domain Controller in SystemState::PerformAccountCheck:1273
[0384] 2012-08-14T10:11:15.421 [fsys\systemstate] - AD:Status Username 'domain\admin' is not a Local System in SystemState::PerformAccountCheck:1291
[0384] 2012-08-14T10:11:15.421 [fsys\systemstate] - AD:Status Username ''domain\admin'is not a Domain Admin in SystemState::PerformAccountCheck:1292
[0384] 2012-08-14T10:11:15.421 [fsys\systemstate] - AD:Status Username 'domain\admin' is not a Backup Operator in SystemState::PerformAccountCheck:1293
[0384] 2012-08-14T10:11:15.421 [fsys\systemstate] - AD:Status FS_SS_ACCESS_DENIED (0xE000FE7D) performing security check in SystemState::PerformAccountCheck:1298
[0384] 2012-08-14T10:11:15.421 [fsys\systemstate] - AD:Status FS_SS_ACCESS_DENIED (0xE000FE7D) calling SystemState::PerformAccountCheck in SystemState::AttachToDLE:623
[0384] 2012-08-14T10:11:15.421 [besc] - Error in SnapshotBackupEngine::open_file_systems from FS_AttachToDLE() for