Again many thanks to all who replied.
The really odd thing (to me) is the fact that I can backup (using SyncBak) any other drive or folder to this HD without problem; and it is fast too. Only exception is the System Image. Fortunately I have another HD (1.5TB) to which I can easily write, and have written, the System Image.
Based on some articles in MS knowledge base: this issue has been resolved in Windows 8.
Can someone confirm?
FINAL POST & SUMMARY:
OK, after having read several dozen online articles concerning this problem, the bottom line is:
HDD over 2.2TB will not accept normal backup or writing of System Image using the Microsoft backup utilities (win7). There is no fix for this available from MS. I have unconfirmed information that this problem may be solved in Windows8.
If you are determined to make system backups on such drives, it can be done using software from the drive manufacturer (e.g. Seagate DiskWizard), or other 3rd party suppliers. Personally I have solved the problem by saving my System Image to a smaller drive (1.5TB) which goes without a hitch.
Users of Win7 can make use of such drives (3TB and up) for normal backup of any ordinary data (photos, data, video etc..). The entire drive can be utilized by selecting the GPT option in the MS DiskManager utility. Right click on the drive identifier and select "format as GPT". After that you may partition the drive as you wish.
Good luck.
Quote