Please make sure that in the backup job properties "automatically select the open file technology" is selected in AOFO properties. On the target server, ensure that AOFO is not installed. Uninstall the remote agent, reboot and then reinstall without AOFO, if AOFO is installed on the target machine. The reason for uninstalling AOFO is that windows 2003 works best with VSS. Once we have ruled out the use of VSP as provider, we can continue to work with VSS.
Thanks