The failure happens while the *.VHD file created by Windows Backup is mounted during backup. The *.VHD file is created as a sparse file and this is not supported by the native VHD driver and hence mounting of the .*VHD failed. The „strict allocate = yes“ option of Samba will force it to not have UNIX style behavior of creating sparse file
# vi smb.conf
[global]
strict allocate = yes
and enabling SMB Large MTU on Windows Clients