Drush backup removes sites directory

This problem occurred while updating the archive module, but may apply to other module updates as well.

Symptom - after doing drush.php pm update, the whole "sites" directory disappears and the website stops functioning. The contents of the "sites" directory gets moved to the backup/modules/date/modulename directory. In my case, modulename was archive.

Details -I traced through the drush_pm.module code and found that $project['path'] for the module was being set to "sites" (line 261) instead of the actual path to the module (sites/all/modules/archive).

I can dig further and attempt to find the problem, but wanted to post this first in case there was a known solution.

Thanks