Is this error appearing for one client backup or for multiple clients ?
Are there any hardware errors logged for the NUDF ? Try running a chkdsk as well.
Under what account are the DLO Administration service and SQL instance running ?
Are the sharing and security permissions for the NUDF configured in such a manner - ?
Share Permissions on the root NTFS folder defined as the NUDF
Administrator: Full Control
Everyone: Full Control
Security Permissions on the root NTFS folder defined as the NUDF
Administrator: Full Control
Everyone: Read and Execute, Read and List Folder Contents
Security Permissions on the NTFS sub-folder within the NUDF for the specific user
