As an update, I worked with one of Kaseya's engineers in hopes that we could just change the "Operating System" data in the SQL Database and backups would work as normal, but our tests proved this did not resolve the issue. Though the Agent showed the update, after kick off a manual backup, it would not actually run and shortly after it would switch the Operating System back to " < 2003". They are going back to the drawing board to see if they can implement a quick fix or it will have to wait the 1-2 weeks to develop, test, and re-release 126.96.36.199 to the masses.
We're having to setup manual backups via the Management Console for the time being. Very unfortunate.