Time Machine on External Drive Problem

[schwine1]

I am trying to use an external drive as the destination for Time Machine backups.
Although the progam looks like it's going through the motions of backing up files, the external drive doesn't progress from the following file contained within it: "2013-01-26-233407.inProgress."

Within the Time Machine options window, the external drive is listed but greyed out under a heading that reads "Exclude these items from backups." Because the external drive is greyed out, I can't select and delete it from this window.
The external hard drive, labeled as Time Machine Backups, says it is only 663.3 MB in size for some reason, but this is actually a 1 TB hard disk.
Also, the external drive has been formatted as "Mac OS Extended (Journaled)." Even after I format the external disk with this Journaled option, the small amount of space (663.3 MB) continues to appear.

Thanks for any tips on how to prepare the external hard drive so that it can be used as the destination hard disk for Time Machine backups.

 

[chas_m]

Dude -- you have your boot drive listed to be EXCLUDED from backups! What do you expect to happen when you tell Time Machine NOT to back up your boot drive?

(the TM drive is of course greyed out because it is automatically excluded from being backed up -- it's your backup drive!)

To fix this, REMOVE "Macintosh HD" from the list of drives to be EXCLUDED from backups.