1. Best Practice for setting up the server drives?
This depends on your/IT preference but usually a smaller C drive for the OS and programs, with a larger D Data drive to store your QlikView content such as dashboards, QVDs and anything else that is required to use the apps.
Then maybe another drive letter if there are achieve or files that don't need backing up, or store them to the network.
2. Best Practice for Backups?
If its a VM then snapshot as required, with some retention on the 'D Data' drive so you could compare a dashboard from afew days ago with the current one.
I'd say you could use any backup program.
3. Would a highly defragged drive cause backup issues? Windows defrag only shows 7% but defraggler shows 70%.
Drive fragmentation would only slow down the OS and QlikView reading/writing files.
You are running a very old version of QlikView 11.0 sr2 was released Nov 2012!
V11.0 has been superceeded by v11.2 which is currently on SR15 or look at QlikView v12 which is on SR5.
To support users running IE11 you need a minimum of v11.2 SR5
I would suggest upgrading, as there have been hundreds of fixes released since your version.
Do the backup logs indicate whether any specific files or folders are causing the backup failure?
How are you backing up the files - to another HDD, to tape, across a network? QVW and QVD files can be very large and this may be an issue for you backup system / software.
Could it be a contention issue - is you backup trying to access files at the same time as QlikView?
I would look for any old versions or duplicates of your QlikView apps (QVW files) as if these contain data they may be large.
You can remove the data from the old apps if you wish to retain them for reference of the scripts which will reduce their file size. QlikView only accesses disk when opening an app and reloading data. One the app has been opened, all data is in RAM so fragmentation will not affect QlikView.