Yes, it started failing after the very first diff backup..and the daily diff backups are taken in a maint. plan.
and here is the code:
BACKUP DATABASE ABC
TO DISK = 'D:\Backups\ABC\ABCDifferential.bak'
WITH INIT, DIFFERENTIAL, NAME = 'ABC_Differential', DESCRIPTION = 'ABC Differential backup'
The Maint. Plan has three tasks...
1) Diff backup (above code)
2) T-Log Backup
3) Full Backup with COPY_ONLY option