I got this tip from 'BK' here: http://appletoolbox.com/2012/04/iphone-could-not-backup-because-backup-file-was- corrupt-or-not-compatible-fix/
'In case anyone else is running into this problem and the steps above do not help you.
I was receiving the same message and after days of fruitless Googling, I noticed that I did not even *have* a directly called %APPDATA%\Apple Computer\MobileSync\backup.
I created the folder structure and everything starting working.
Note to the previous poster who wanted more specifics⊠To find the folder you need, right click on the Start button and choose âOpen Windows Explorerâ.
In the address bar at the top, click and type %APPDATA% (with the percent signs) and hit enter. This will open some folderâtypically C:\Users\username\AppData\Roaming on Windows 7, but could be somewhere else depending what version of Windows you have and your particular setup.
Then open âApple Computerâ. If âMobileSyncâ does not exist as a folder, create it (âNew Folderâ and give it the name âMobileSyncâ). Open the MobileSync folder. If âbackupâ does not exist as a folder, create it, then open it.
Unless you just had to create the folders in the last step (in which case you are probably all set), you will find one or more folders in here containing your backups. Delete these (or move them somewhere else as a safety precaution, then restart iTunes, reconnect your device, and hopefully you will be all set.'
Worked like a charm!