I would start by going into the Disk Manager on the server in question, and see if there is a volume without a Drive letter. If so, assign a drive letter to this partition, and redo the Backup specification to see if this new drive letter is shown
If it is, and the backup fails teh same way, there were a couple of fixes that I saw in lab cases. You did not specify what version of DP you are using, so I am not able to find out if this fix made it int a Disk Agent patch