Win32 error: The directory name is invalid.

1. Log on to the server with VSS credentials and run the SET command.

2. Find lines like the following ones:
   TEMP=C:\DOCUME~1\USER\LOCALS~1\Temp
   TMP=C:\DOCUME~1\USER\LOCALS~1\Temp

3. Make sure the specified folder exists and that you can perform read/write operations on it. 

In addition to user variables, you need to check system variables as well:

1. Open System Properties, go to the Advanced tab.

2. Click the Environment Variables button.

3. Find the System variables section and make sure the TEMP directory name indicated here is valid.