Thansk for the replies

GilaMonster- initially the job creates the folder (create sub directories for each database), when it failed I tried it by creating the folder.

The SQL agent and server has the correct permissions as its created folders and backup files on the same drive and directories.

As this is a cluster the SQL has a dependancy on the drive.

UnixBomber- No its not the real name of the database. I just masked it