The 'backup command' is not supported by recent MySQL servers. It has not been for many years. I think it was removed in MySQL 4.0 6-7 years ago. Accordingly we have removed it from SQLyog as well. It also never worked with InnoDB. It simply copied Isam/MyISAM tablespaces.
You are executing a command and you get a server error. Then the problem is with the command and not the client. Any SQLyog version and any other client would face the same problem. You have probably also switched to a more recent server than what you had before and that is why you get there error?
You should generate a SQL-dump instead.