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And here is how support responded for other newbies
Make sure your external drive is properly partitioned:
* Start Disk Utility
* Select the external drive hardware in the sidebar
* Click the Partition tab
* Click Options
* Choose the proper partition scheme (GUID for Intel macs, Apple Partition Map for Power PC) and accept the page
* Use the UI to divide the drive as needed, even as a single large partition. Use "Mac OS Extended (Journaled)" as the format type and name appropriately
* Click Partition.
Once that's done, you'll just use "Backup - all files" from the source to the destination, with "Smart Update". The User's Guide (Help > User's Guide) goes into more detail.
Note that if you want to store alongside time machine, you need only select that volume as the destination drive. As long as you're using Smart Update, we take care of the rest of the details. Note, though: if the drive is not properly partitioned (see above) it won't be bootable.
Hope that helps!
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