0x80070003 on Windows Backup. Delete sys file?

I'm diaging a clients computer and external backup. The USB external backup is toast, so no problem there. Win7 Backup however, is giving me grief.

Initially it was hanging at 57% which was attributed to the external backup. I switched to a USB 16gb flash drive and it will complete 100% EXCEPT for 2 single files:

I don't have the exact address at the moment but this is from memory and I'm 99% sure of it:

C:/windows/system32/config/systemprofile/Desktop/{foldername}./[foldername].

It's referring to a folder of photos on the Desktop. Inside is a folder of pictures and a matching ZIP folder.

Now, I've tried moving the folder into Documents, I've transferred the folder onto the flash and deleted the one on the desktop.

Still, when I run Backup, it completes with a RED bar and says the folder was skipped. The path, however, is what you see above. I can't access that exact path- only as far as systemprofile.

I want to be able to either remove that path or allow the folder to be backed up. I want to be able to run a clean Backup with no issues, as I'm sure the client wants it that way.

Any suggestions?

EDIT: It's also weird that the folder name ends with a period (/Folder./folder.)

I've read that Zipped files can cause errors, but I've tried Backup with the folder deleted with no change.

Has the folder perhaps been moved since it was made? And the config folder needs it back in the original location? I don't know...