Am I correct in assuming that Force Illusion does not work vs backup muscle , or other unblock-able damage sources ?

backup muscle doesnt deal damage to be blocked, it just moves damage tokens onto you

Moved Damage is not considered to be taken. (P. 20 of the RRG)

Force Illusion begins with 'Before attached character takes damage.'

So no, no triggering Illusion off Backup Muscle.