Out of curiosity have you tried to using another drive (off array/different controller/USB) as the destination? Duplicati can be really IO heavy at times and going to and from the same device would presumably make it about as bad as you indicate.
Keep in mind the first backup will be a long one. A recent install took 1day 16hrs to run the first time (358GB from RAID1 array to external USB, horrible mix of data types) but now that the initial backup is complete it only takes 18-20 minutes to run each day.
Have you tried using the --use-block-cache option? That should help mitigate a bit of the IO load but I’m betting having a different destination will change things even more.
In my mind a backup is something you can take off-site or at a minimum physically isolate otherwise it’s just a less convenient copy of the original data that is still subject to most of the original data’s failure points if it’s still in a “Live” device.
You may want to change your service setup a pinch, with your current config in C:\Windows\system32\systemprofile\AppData\ it can be moved/replaced during certain Windows Updates. See this post for more details along with instructions on how to move it to a safer location.