I experienced a very similar problem on my machine at home and it took me some time to figure out where the issue was.
In my case, it was the 100MB system partition that Windows setup during the installation that was under capacity. As it says, if you have a volume under 500MB, the minimum is 50MB of free space. In my case, my 100MB volume only had about 40MB free when i was trying to do the system image...and thus it wouldn't work.
For whatever reason, within about an hour or so, the space on that system partition freed up on it's own and when it was over 50MB free, I tried the backup again and it ran perfectly
Give that a shot, I'd bet that is where the issue is. You will probably have to go into disk management and assign a drive letter to it, in order to see it. As to why that partition fluctuates in size...I'm not sure.