I'm in a similar boat. I'm getting the same error:
Splitting thread ID 0 into archive 2
E:tar_open error opening ''
E:Error creating tar '' for thread 0
I:ERROR tarList for thread ID 0
E:Error creating backup.
I:createTarFork() process ended with ERROR=255
I:Set page: 'action_complete'
I:Set page: 'rebootcheck'
I:Root permissions appear to be lost... fixing. (This will always happen on 4.3+ ROMs with SELinux.
I:Copying file /cache/recovery/log to /cache/recovery/last_log
However, I'm using a Samsung Galaxy S3 TMO..... and I successfully used TWRP 2.7 / Nandroid to backup my system before.... but now it just gives me this error. Currently trying to backup a rooted stock rom that I used ODIN to put on the device.
EDIT: SOLUTION! I just checked Enable Compression and it seems to be working.....FYI.