When larger buffer sizes can't be obtained because of the memory outside the buffer pool is fragmented or under pressure you end up with smaller sizes and more I/O requests.
This error message indicates that the contiguous virtual memory is either insufficient or is too fragmented for the computer to successfully perform a backup. Contiguous virtual memory that is insufficient or that is fragmented could lead to performance problems when you try to back up the database.
The amount of contiguous virtual memory that is used by the SQL Server 2000 backup process is calculated based on the number of backup devices and the number of database files. The amount of contiguous virtual memory varies based on the type of backup that is being performed and on the type of backup device or backup devices that are being used.
To determine that the value that you have chosen for the MaxTransferSize parameter or for the BufferCount parameter is correct, you may want to test the value
To get complete calculation and methods to solve this issue use the Microsoft KB Article http://support.microsoft.com/kb/904804/en-us