The select into/bulkcopy option must be set in a database when you want to do non-logged operations such as SELECT INTO or fast bulk copy (bcp).
SQL Server (version 4.2 and later) allow transaction logs to be dumped while this option is turned on, provided that no non-logged activity has taken place since the last database dump. SQL Server detects whether any non-logged operations have been performed in a database. If an attempt is made to dump the transaction log to a physical dump device and it detects that non-logged operations have been done, it raises a version of the 4207 error, stating:
DUMP TRANsaction is not allowed while the select into/bulk copy option is enabled or if a non-logged operation has occurred: use DUMP DATABASE, or disable the option with sp_dboption.
As the error states, it is necessary to turn off the select into/bulkcopy option and dump the database before transaction log dumps can be issued.