Will Backup Run on Password-protected Computer

[rauckr]

If you recall, I indicated that the backup ran last night until it reached the virtual machine file (visible in the terminal output). I made a second attempt this morning while I was logged in and watching. The backup seemed to stall while it was reading the virtual machine file again. Is there anything different about the "smart" backup that would result in a problem not seen in the full backup? Also, does the failure of a backup to complete leave the backup file corrupted and unsuitable for further backup attempts?