Hi CarynG,
At this stage:
Unpacking backup...
Error message: Could not create directory.
... the only directory its trying to create is inside wp-content/upgrade/ (not that dir itself, but one inside there).
The other possibility is that perhaps the directory name it is trying to create is too long, or has non-standard characters in it. (This is just me trying to guess what the problem could be). If you can wait a bit I will create a version of UD that eliminates those two possibilities (it won't be today).
David