NetWorker: NVP vProxy: MSVMAPPAGENT SQL Transaction Log Backups Failing "MSSQL Agent failed to create a transaction log backup."

The NetWorker VMware Protection (NVP) integration is configured with the vProxy Appliance.  
Microsoft Virtual Machine (VM) App Agent (MSVMAPPAGENT) for SQL Server application-consistent protection is configured to perform a backup of a VM with Microsoft SQL Server.
The backup of the VM fails, indicating the MSSQL Agent failed to create a transaction log backup. The NetWorker Management Console (NMC) session details and session log shows:

YYYY/MM/DD HH:MM:SS INFO:   [89] MSSQL: Executed MSSQL Agent operation 'backup_transaction_log' on guest VM.
YYYY/MM/DD HH:MM:SS INFO:   [89] MSSQL: Executed MSSQL Agent operation 'monitor' on guest VM.
YYYY/MM/DD HH:MM:SS INFO:   [89] MSSQL Agent: Performing transaction log backup for SQL instance 'VM_NAME'
YYYY/MM/DD HH:MM:SS ERROR:  [89] MSSQL: MSSQL Agent: 
YYYY/MM/DD HH:MM:SS ERROR:  [89] MSSQL: backup_transaction_log: Failure monitoring progress: MSSQL Agent: 
YYYY/MM/DD HH:MM:SS ERROR:  [89] MSSQL: MSSQL Agent failed to create a transaction log backup.
YYYY/MM/DD HH:MM:SS ERROR:  [89] MSSQL: Backup of the application "MSSQL Agent" on the virtual machine "VM_NAME" has failed.
YYYY/MM/DD HH:MM:SS INFO:   [89] MSSQL: Disconnected from MSSQL Agent in "VM_NAME".

The target VM's C:\Program Files\DPSAPPS\MSVMAPPAGENT\logs\msvmagent_appbackup.log shows:

52701:msvmagent_appbackup: Command line: C:\Program Files\DPSAPPS\MSVMAPPAGENT\bin\msvmagent_appbackup.exe -i - 
37693 MM/DD/YYYY HH:MM:SS msvmagent_appbackup NSR info SQL Connection to VM_NAME is created. SQL Server Version is 13.00.5026
...
153887:msvmagent_appbackup: Microsoft SQL server documentation provides details about the following SQL Server Provider error:
38008:msvmagent_appbackup: The server principal "NT AUTHORITY\SYSTEM" is not able to access the database "SQL_DB1" under the current security context.
153416:msvmagent_appbackup: (Error: 916)
37938:msvmagent_appbackup: Failed to obtain filegroups for SQL_DB1.
Backing up SQL_DB1...
172257:msvmagent_appbackup: Backup of SQL_DB1 failed.

The MSVMAPPAGENT runs under the SYSTEM account for data protection operations. Configure all SQL Server instances in the VM to grant "NT AUTHORITY\SYSTEM" account sysadmin rights: