There are two file path settings on the Administration\Backup (ConfigurationBackup.aspx) page. The "Backup File Path" setting corresponds to the application backup. The "Backup Database Path" setting corresponds to the SQL server backup.
Typically, the application backup path setting must be set to a path local to the application server. If Secret Server is running under an account that has permissions to write to anything other than a local path, then a network share can be used.
The "Backup Database Path" setting can be set to either a path local to the SQL server or a network share. For a network share, the account under which SQL server is running either must have modify rights to that path or must be a member of a group with modify rights to that path. You must use UNC (Universal Naming Convention) notation to write to a network path (ie. \\TESTVM0\c$\backupDirectory). NOTE: If you are getting an error stating "Cannot open backup device '<path value here>'. Operating system error 3", this is often due to an invalid path value.
Note: For Secret Server to be able to delete old Database Backups, the "Backup Database Path" must be accessible by the Secret Server Application Pool account.
Also see:
Backing up Secret Server to a network share
Article ID: 66, Created On: 11/24/2009, Modified: 3/9/2012