I thought that maybe for testing purposes I'd just settle for using a "File and Folders" backup and select the specific folders I want to backup (essentially excluding any ROOT LEVEL folders I don't want backed up). It's not a solution to the problem by any means because I still get SUB folders that I don't want.
But a more serious problem I've run into is that there doesn't seem to be a way to recover a FOLDER and all of its contents from a "Files and Folders" backup. [ !?!?!?!? ] I can select files and choose to recover them, but selecting a folder causes the recover options to be disabled. So, my only option for recovering a folder (without using a recovery point - which collects about 20GB of data that is already backed up in other ways) is to go into each folder and select all the files one at a time!? Come on!
This makes custom exclusions from recovery point backups a necessity for this product. Without it I might as well use any other drive imaging software and stick with Vista's backup features for the rest.