These are the steps to reproduce this issue:
1. Select a flash drive as the backup destination.
2. Remove the flash drive and reinsert it.
3. Open N360 and select Backup => Run Backup, which fails with the message There is a backup problem. Make sure the destination drive is connected and then try again.
4. Open N360 again and select Backup => Backup Sets => Run Backup, which runs successfully.
Whenever I want to run a backup across multiple backup sets and I have removed and reinserted the flash drive, I must remember to select Backup => Backup Sets => Where, select the destination (which is already selected) and then click Update Settings. Needless to say this should be unnecessary, and it's annoying when I forget to do it.