Error message

VSS Snapshot Creation failed. Check Log file for more details.
# or
Warning: Plugin VssPlugin do_VSS failed.
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Warning: Plugin VssPlugin Post VSS failed.
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Running as 'SYSTEM'. Privmask=00000206
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VSS PLUGIN start backup job
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Warning: Plugin VssPlugin finish_VSS failed.

Description

The VSS failure you are seeing on the backup is due to insufficient storage space available to create the VSS snapshot.

The actual error text in the trace files is Error text: VSS_E_INSUFFICIENT_STORAGE.

Steps to resolve

Run systeminfo from Diagnostics and you can see the available resources for the server.

If this is a VM, you may be able to devote more system resources to that server and get away from the error.

See Microsoft Docs for further details.