I've been playing around with Windows 2008 and I thought I'd better make a backup (or at least try their new backup tool).
First, you have to install the Windows Server Backup. Gone are the days where NTBackup is included. So, after going to the Server Manager and adding this as a new feature, I came across this issue when I tried to create a backup job.
It would appear you have to have additional local drives connected, in order to backup. No backing up a server and having that backup file stored on your network. How silly.