Whats the folder you are trying to change it to?
And by the way, it would not transfer the content in 'c:\testbackup' to the other folder unless you had that as the source which is currently 'c:\testsource'? Make sure either this was a typo or you might be doing it backwards. The xcopy DOS command to copy all contents of the c:\testsource directory to the c:\testbackup.
XCOPY is similar to the COPY command except that it has additional switches to specify both the source and destination in detail.
/M Copies only files with the archive attribute set, turns off the archive attribute.
/E Copies directories and subdirectories, including empty ones.
/Y Suppresses prompting to confirm you want to overwrite an existing destination file.
You might be having issue with the directory length and/or spacing.