This policy setting allows you to manage whether backups of a machine can run to locally attached storage or not. If you enable this policy setting machine administrator/backup operator cannot use Windows Server Backup to run backups to a locally attached storage or disk. If you disable or do not configure this policy setting there is no restriction on locally attached storage or disk being backup target.
Disallow locally attached storage as backup target
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HKEY_LOCAL_MACHINE -> Software -> Policies -> Microsoft -> Windows -> Backup -> Server # NoBackupToDisk
Windows Components -> Backup -> Server