Well, took me a long time to get back here.
Like I said in my opening post, I am fully aware of 3rd party programs to remedy this. Any dropbox like sync tool will fix this. Windows has skydrive for instance, or whatever it is called now. That's not the point. The way I see it, SE backup/restore tool is not working properly, and I refuse to use a 3rd party program to sync my FFXIV files because of all the hacking going on. Yes, I cannot be hacked through the files on my characters folder, however I don't even want to consider using other programs for something that already exists.
I was afraid that I might be using the tool incorrectly, however if this is not the case, I'm here to point that out to SE in hopes of a fix of some sorts, that is basically it ^^