Forgot to mention the tlog growth from the start as I was pretty sure that was also an issue. The log file growth was set to 10 % and the free space on the drive was about 10% of the entire drive. Obviously that's an issue. Changed that to 10 MB and am running another backup.

Gail, I think it's a combination of issues. I think they deleted a backup file that was still in progress. Is there any way to stop this backup operation that the sys.databases table thinks is still in progress?

Correction: The backup failed b/c the tlog ran out of space 2 days ago. There is no backup run Sunday night/Monday morning. Then a backup attempted to run this morning with the previous backup showing as still active in sys.databases. Ugh what a mess.