I have a server that has a 2TB drive that is about 80% full most of the time. I need a backup and\or imaging solution that a) doesn't require me to boot to live CD to backup and/or image the drive the OS is on (like dd does - sda - ubuntu 10.04LTS) and b) won't have a problem with files that are currently in use or have permission issues (like rsync does) and c) doesn't take 30 hours to compress and archive (dd again) and d) doesn't require 800 hours of tweaking to make work (Symantec's RALUS is not a good option for debian)

The server is beefy. Dell R810 with 512GB ram and four 8-core Xeon X7560 processors. I'm not sure why dd is so slow. I'm writing to a SAN (Dell md3000) via sas5E card with avg throughput of 2.8Gb/s according to benchmark. I can't seem to find where the bottleneck is but, I've decided an on the fly imaging or backup software that's free/open source would be best. I don't feel like paying some company like evault a 6k a year licensing fee for their software.

Everything I've tried so far has been horrible. Suggestions anyone?

Take a look at http://www.amanda.org/

Amanda is good but

1. no system can guarantee open files will be properly backed up; it takes a finite amt of time to backup stuff and getting a matching set of open files is tricky to say the least.
If you can have some sort of snapshot tech eg like ZFS or possibly LVM, that's probably the best.

2. rsync in general should be fine, just needs to be run as the files owner or root; same for any system.

3. hot swap RAID1 is good also if you have the tech

4. Mondo Recue is a possibility, but the main concern is the amt of data; could take a while and requires the system to be not doing too much in order to get a 'matching' set of files (see 1.)

5. If you are running an RDBMS you will have to use the relevant proprietary tool or shut it down in order to get a consistent backup.

Snapshot is the only answer (IMHO of course).
Take a snap, backup at leisure.

Note particularly point 5 above by Chris. Also applies to any (active) file of course, not just a DBMS. Snapshot is a block-device layer tool - it can't know about (in storage) caching.
If you're using LVM2, should be easy to configure. Note btrfs also has snap, but I'm guessing you're not using that.

Then how does Acronis work? (http://www.acronis.com/) It's a paid solution that says it does all the things I was always told you couldn't do with linux. Including an on the fly image of the entire hdd.

Imaging the disk is easy.
Getting one with known data consistency one is the tricky bit.

If you just consider that /proc/ /sys/ and /tmp/ on a running Linux system are in constant "Motion", not talking about a database running in the background because of its open file(s) it needs a "hot data dump" approach.