"Using Backup (Windows7)..."
That was unfortunate. Backup & Restore (Windows 7) is not supported for making backups. It was included in Windows 11 (and Windows 10) so that people who used it to make backups in Windows 7 and Windows 8 are able to restore their backups in Windows 10 and Windows 11. Nowhere on Microsoft's website will you read that Backup & Restore (Windows 7) is approved for making new backups.
For you that means there are no official answers. You either have to figure out something on your own (perhaps with assistance from artificial intelligence) or someone here (or elsewhere) has a tip to share.
The message means that the .xml file (which describes the file structure of the backup) is unreadable.