User directories are notorious for being locked down and not allowing SQL to write to a User Folder. Change the Backup Location to a path that is more universal.
I don’t know what that option does or does not do. I do not use the Backup Database facility whatsoever. I run Backups via BAT/SQL script using Start Process Action.
You can make a Backup at any time. Just know that your backup, when restored, will be in the same state, so if your WP was open and you made a backup, then restore that backup, the WP will be open on the restored version.
“Local Settings” are kept in files in the Windows User path ([Documents]\SambaPOS5).
Obviously images are not stored in the DB since they are always referenced by their Path. The Path is stored in the DB, but not the Image itself.
Nearly everything else is stored in the Database.
If you restore a backup from your Test machine onto your production machine, everything on the Prod machine will be replaced. That means any Transactions (Sales, etc) that you have made will disappear on the Prod machine.
It also means that any test Transactions on your Test machine will be restored to Prod machine.
Because of this, you can see why restoring Test backups onto Prod is not something you should do. That is what DB Tools Export/Import is for… you develop your Reports, Automation, etc on Test machine, then export the elements from Test, then import the elements on Prod …