What is the source for your statement "As I understand Windows Backup will not work with HDD encrypted with EERM"?
I am experiencing this but don't know that this is a limitation.
Just had EERM pushed out to my notebook computer. I had been having no trouble using my Seagate 2 TB drive with Windows Backup and Recovery until now. Image backups are not supported on the McAfee encrypted portion so I had to remove that option. No backup has succeeded since. I get the error code 0x81000037 every time. I've contacted our internal IT help desk and I will be recommending holding off on widespread deployment until this is resolved.
Moved this into Encryption: EEM Managed as the best spot for it.