Hey Tim,
It seems you are backing up exchange 2007 here.. Exchange 2007 backup will always be a snapshot based backup.
Looking at the error message, make sure that Volume Shadow copy Service (VSS service) on your exchange server is not disabled, if it is disabled, enable and start it.
Also check the event viewer on the exchange server, and check if there are any VSS related events there.
Hope this helps.
Regards,
tech29