Where is the temp VSS storage

Hi

We have a windows 2008 client that has a couple huge idb files (42GB each) under D:\

When the FS backup runs we get an error in event viewer "The shadow copies of volume D: were aborted because the shadow copy storage could not grow due to a user imposed limit."

Subsequently the job fails with a status 156. Even if I exclude all idb files this error happens. 

So what I want to know is where does shadow copy put these files while its snapping them? And how can we increase the space? Does it move the entire 42GB file to the temp shadow copy space, or in chunks?

Thanks