Problem

Open file backup fails with E_UNEXPECTED (0x8000FFFF), and the log indicates that the VSS MSDEWriter failed with failure code 0x800423F4.

This error has three known causes:

1. The SQL Server (MSDE) volume shadow copy writer fails when the SQL Server database recovery model is not set to simple.

To resolve this error, please change your SQL Server database recovery model to simple. The software automatically performs incremental backups, so the more complicated recovery models should not be used, as they interfere with the backup process and create redundant data. Please see here and here for more information.

2. The SQL Server (or MSDE) startup service is running under a startup account with the format .\UserName. 

To resolve this error, configure the startup account of the SQL Server service to use the LocalSystem account. Alternatively, use a fully qualified user name: Domain\UserName. Please see here for more information.

3. A Microsoft SQL Server component, SQLVDI.dll, was unregistered. This typically happens when an application that uses MSDE is uninstalled on a server that is also running SQL Server. More details and instructions on how to fix this condition are available in Microsoft KB article 830575.

Resolution 

Change the database recovery model to simple:

1. Start SQL Server Enterprise Manager.
2. Navigate to each database that you are backing up.
3. Right-click each database and choose Properties.
4. Click the Options tab.
5. Under Recovery, set the model to Simple.

Change the startup account of the SQL Server service:

1. Start the Services task within Administrative Tasks. Alternatively, run services.msc
2. Locate the MSSQLSERVER service in the list.
3. Right click on the service and choose Properties.
4. Click the Log On tab.
5. Change Log on as to be the Local System account. Alternatively, click This account and specify an account located within a domain.