Backup and Restore Windows Drives to VHD files - repost

We need a Windows application that backs up and restores Windows drives, saving backups in mountable VHD format. You can start with Open Source as long as the license allows modification and redistribution for commercial applications without releasing our modified source code. The first backup should be full – all sectors that have data. Subsequent backups should back up only the changed sectors. While this first proof of concept will back up and restore using a local drive, the end product will do so online using an FTP-like protocol. So, keep in mind that we need to optimize bandwidth during transmission and when searching for changed sectors. I will also post a project for doing the same with hot-and-in-use VMware and Hyper-V client files on a Windows host, so if you can do that one, too, tell me so in your proposal and add to the cost to your quote.