Windows 7: Windows 7 image backup, error not enough space for shadow copy

I am not able to make backup, I get message not enough free space for shadow copy? How do I resolve this? I understand some kind of USN journal is created on
System reserved partion. This hidden partition was created when I installed and now I have only 38Mb free out of 100Mb. As I understand this has been an Issue for more than a year, and still Microsoft has not resolved?

I've had that error a few times. I think I tied the times of when it happens to installing new software, perhaps an upgrade of security software ..but that isn't certain. I have never found a definite resolution for the problem but after looking at the partition in Disk Management, scratching my head and rebooting a few times, the percentage of free space has just magically increased. Then the disk imaging procedure works OK.

I have read that this partition can be merged with the C: Drive and if installing the system afresh, the same can be done. However, just as I start considering this, the problem has thankfully gone away.

This guide will show you how to check and resolve any USN journal issues on your system reserved partition using the windows file system utility, "fsutil".
Windows 7 backup error 0x81000019 - a knol by Yohann Sulaiman

This is often the cause of 0x81000019 errors when making a system image.
If this isn't the problem then you need to consider one of:
1) increasing the size of system reserved
2) remove system reserved and include its booting functions in the OS partition
3) use other 3rd party imaging software like Macrium Reflect.

Like one other post said, mine System reserved (USN journal) also by itself reduced in size. Now
I have 70Mb of free space. But It tooked many days before this happened! Now I can make backups again :-)

I am missing your point.
My link shows you the way to clear the USN journal files from system reserved immediately.