Especially as it is apparently making the backups already, you just can't access them.
System Restore uses the volume shadow copies, so you wouldn't want them turned off even without the Previous Versions functionality.
System Restore reverts data files as well as system files?
Volume shadow copy is used under the covers for both System Restore and Previous Versions. However these features are separate from each other. System restore only affects system files and previous versions is used to restore specific user files and folders.
On Home versions you get System Restore but you don't get Pervious Versions.