Hi abdi,
Sorry I may not have made my self very clear.
I've got two lots of backups running.
1.) Full server backups via Virtuozzo intended for disaster recovery (this contains everything)
2.) Customer file and database backups via a s3cmd script which goes to Amazon S3, not via Plesk.
For the file/database backups, this is just to restore files or the database itself but not a full Plesk backup. So in this case, I'm guessing it will be ok to exclude the "system" directory for these ones.
It's a little strange to why the script is getting stuck on that directory sometimes though, it throws an error advising that a particular file doesn't exist, if it didn't exist I would have thought it wouldn't have known about the file and it would just back up everything else, weird.