When you enable system state backup using DPM 2007, it will create the backup files in default location (%systemdrive%\DPM_SYSTEM_STATE ). You need to make sure you have enough hard drive space to store your system state files. Otherwise your system state backup will fail with a "replica inconsistent" error message. I have seen this issue at many of client sites. If you don't have enough hard drive space to store the system state, you need to modify the default system state location by editing the PSDatasourceConfig.xml file. Here is the TechNet article:
Make sure to use the correct location in the PSDatasourceConfig.xml file. For example, if you want to store system state backup in D:\System State use D:\System State\* format..don't miss the "*"