I dont have the .backup folder. I just downloaded the first version I could see online!I'm able to reproduce it. It is related to an update to the build tools.
The latest version of adb.exe returns wrong error codes.
I'm able to get it working by copying adb.exe from <sdk>\platform-tools.backup to <sdk>\platform-tools.
Which came to this page ADB Kits downloading and extracting the ADB Kits.zip file into <sdk>\platform-tools. It happened to be 2.0.0 where the installed one was 2.0.1 All working now thanks!!