I soon discovered that anyone else with a 100MB System Reserved partition had this Error. I tried many things to expand the partition with no luck. So I just made a new partition and used CMD to move the files over to the new 500MB partition I made.
Can we assume your install was done over Windows 7, so the original System Partition was left in place. And your install is Legacy, so UEFI is not involved?
If that is the Case, the Windows 8 install should have put its Recovery files in a Recovery folder on the C: Partition so only the Boot files were in the System partition, so it should not be giving you a size error.
The backup process would normally need around 50 MB of free space to make Shadow Copies. Do you remember what percentage of the 100 MB partition was free? If you don't, tell us what percentage of the 500 MB partition is free.. I do not remember if the size requirement I saw was different for a 100 MB partition, but the number came from WBAdmin.exe, not the 10% definition.
How did you create the new partition, and if you used Diskpart, what command was used? Also, how did you combine the partitions if a different utility was used?
My guess is the BCD store may not have been setup correctly.
But some info that might help would be a snipping tool picture of your Disk Management Window, expanded to show the information about the partitions and attached.
Also type the following command in an Administrative Command Prompt window and attach the resulting text file. Copy and paste if you like.
bcdedit /enum all > %userprofile%\Desktop\BCDtext.txt
If you are using Powershell, use this command
bcdedit /enum all > $env:userprofile\Desktop\BCDtext.txt