If you need this level of configuration, Windows Backup may not be for you. Its general purpose is to keep your grandmother from losing her photos when she does something stupid (sorry gran).
Every time I change a setting, it seems to go through the entire process again, why? Is there no way to add/remove a folder without going through the entire pain again?
To my knowledge, Windows Backup is kinda stupid in this respect that it doesn't seem to poll the filesystem for recent writes, but if you add or remove a folder the first thing it does is back up again.
Is there any way to limit the storage space used?
Yes. (Just for the record it normally limits itself to 30% of the backup drive.)
My C:\System Volume Information folder keeps growing (~ 1GB). Shouldn't it be using just Q:\?
It builds and compiles together the backup before copying it over, IIRC.
How would Windows react if all of a sudden I resized and/or moved my partitions? Would my backups still be valid? And what if a drive letter changes?
If a little thing like a partition resize could invalidate an entire backup, there's a problem. Besides, Windows backs your files up into a bunch of zip files (and usually a hard disk image) along with some metadata. It identifies the drive by UUID last time I checked, so you might have to reconfigure the location if you move the partition or something.
That said, it's ostensibly not a good idea to repartition your backup drive with backups still on it.