Time Machine Error:  backup to large requires 523 MB but only 8.4 GB avail

For about a week now I am getting the following backup error:
This backup is too large for the backup volume. The backup requires 523.3 MB but only 8.4 GB are available.
Then the latest backup fails.
This makes no sense to me. My backup volume is 150GB external USB Buffalo drive. It has been working great for months now. Based on some information I read in another post I excluded my application folder that added another 15.2 GB not needed to backup. I also tried unchecking the box that warns when old backups are deleted.
I have read through many post but have not found an answer yet.
Any suggestions?
Below are the details on my external drive as reported
USB2-IDE Bridge:
Capacity: 149.05 GB
Removable Media: Yes
Detachable Drive: Yes
BSD Name: disk2
Version: 1.06
Bus Power (mA): 500
Speed: Up to 480 Mb/sec
Manufacturer: BUFFALO INC.
Mac OS 9 Drivers: No
Partition Map Type: MBR (Master Boot Record)
Product ID: 0x002a
Serial Number: xxxxxxxxxxxx
S.M.A.R.T. status: Not Supported
Vendor ID: 0x0411
Volumes:
Time Machine Backups:
Capacity: 149.05 GB
Available: 8.18 GB
Writable: Yes
File System: Case-sensitive Journaled HFS+
BSD Name: disk2s1
Mount Point: /Volumes/Time Machine Backups
Details on my hard drive and partitions
ntel ICH7-M AHCI:
Vendor: Intel
Product: ICH7-M AHCI
Speed: 1.5 Gigabit
Description: AHCI Version 1.10 Supported
Maxtor 6L160M0:
Capacity: 152.67 GB
Model: Maxtor 6L160M0
Revision: BACE1GE0
Serial Number: xxxxxxxx
Native Command Queuing: Yes
Queue Depth: 32
Removable Media: No
Detachable Drive: No
BSD Name: disk0
Mac OS 9 Drivers: No
Partition Map Type: GPT (GUID Partition Table)
S.M.A.R.T. status: Verified
Volumes:
Macintosh HD:
Capacity: 132 GB
Available: 20.07 GB
Writable: Yes
File System: Journaled HFS+
BSD Name: disk0s2
Mount Point: /
WINDOWS XP:
Capacity: 20.35 GB
Available: 6.52 GB
Writable: Yes
File System: MS-DOS FAT32
BSD Name: disk0s3
Mount Point: /Volumes/WINDOWS XP
<Edited by Moderator>

Thanks for the quick and accurate advice. Since I had never done this before it took me a while to figure out how to partition the drive as GUID. I did not understand I had to create a partition and click on options.
On Apple's Support website for OS X 10.5 Time Machine under Mac 101: Using Time Machine in Mac OS X 10.5 Leopard (see below) it should have information about how important it is to partition a new drive as GUID then how to do it. It just says I won't have to worry about backing up again. For me I had to erase all my backups - this time nothing was really important that was not on my main drive. It would have been good if I could have set it up correctly the first time.
Getting started
The first time you attach an external drive to your Mac OS X Leopard-based Mac, Time Machine asks if you’d like to use that drive as your backup location (you may need to erase the drive first). Choose yes and Time Machine takes care of everything else, automatically, in the background. _You won't have to worry about backing up again._
Message was edited by: John Soles
Message was edited by: John Soles

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