This took me ages to discover (and hat-tip to Sarah Bourne for the answer) so I’m posting it as it might help someone else.
If you suddenly start getting this error when doing backups on Windows 7, run a full security scan and kill any quarantined viruse. (I use the free-to-download Microsoft Security Essentials.)
Why the error message is so stupidly unhelpful, and why Windows back-up doesn’t simply carry on in the legitimate assumption that you’d rather not backup quarantined viruses, are just two of the many mysteries of the universe.
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Windows Backup did not complete successfully ”