That's odd, one way to check would be to create a bootable trueimage cd. Boot with it in the drive, this should then start up TI without booting to windows, where you can backup, restore, etc. Try to make a backup of c:\ to your 2nd hd.
If it does this, click on the restore image icon, if it sees the image you have just created, then no prob.
I've always preferred this way of creating backups, rather than doing it within windows itself.
Hope this helps.