Your interpreter line and your command line should be separate:
Code:
#!/bin/sh
tar -Pvcf ../`uname -r`/`date "+%m%d%y.tar."` --exclude /tmp --exclude /var/run --exclude /dev --exclude /backup $* /
As unspawn indicated you should give your errors when asking questions as it helps to debug. I'm sure the above is an issue but may not be your only one.
The "#!...." is special syntax as first line of a shell script that tells it what interpreter (shell, perl, other...) to use to execute what follows that line.