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Thanks for creating a support ticket with us regarding this error, and we appreciate that you resolved it on your own. Also, I'd like to share the root cause of this error in this post, so it will help other users who are facing a similar error when backing up their VMs.

You configured backup for your Hyper-V VMs by enabling application-aware processing. Vembu requires the “Vembu Appware Tool” to be installed on your VMs to perform the application-aware processing. It seems the antivirus software installed on your VMs was blocking the installation of the “Vembu Appware Tool”, and that's the reason backups were failing in your environment. After uninstalling the antivirus software from your VMs, the backups are now running fine.