I'll ask the obvious but you're not trying to create an image in safe mode, right?? You are getting the "safe mode" error in a normal Win7 boot??
You shouldn't be backing up in safe mode if that is what you are trying to do. If you are in normal mode, I'd run SFC /SCANNOW from an elevated command prompt and see if there is a corrupt system file that is causing this.
Hi, there are a lot of programs that work on a PC by CIRCUMVENTING the access-PC-resources-through-windows paradigm.
In this category are viruses, partition/boot managing programs and security programs. They can lead to baffling errors.
I have several times fallen victim to forgetting about things like fingerprint scanner software (which can have an effect even if you have not set it to require a fingerprint swipe), and another one that might escape your mind is some kind of backup/restore utility supplied by the PC maker to return it to factory fresh condition.
Does any of this ring a bell?
Have you tried booting off a Windows 7 Install disk, and selecting Repair off the second screen and trying "startup repair"?
Often does the trick for gremlins inserted by these kinds of programs..
[Also another cause of problems is some cheesey anti-virus supplied on a trial basis with your PC which you may have chucked and replaced with something more industrial like Norton or Windows Security Essentials. Even if you uninstall the cheesey cruddy trial antivirus, often they do not remove correctly, even with their own removal utility.)