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Sep 27, 2016 2:51 PM in response to mzfotojby Rich839,Hi,
The message is telling you that your external drive is not formatted for Apple. It should be formatted Mac OS extended (journaled). Check Get Info to see what format the disk has. If it's not formatted for Apple, you can reformat it with the disk utility app on your Mac, but that will result in deleting all data on the drive. So, you will need to move everything off of the drive before reformatting. I suggest that you buy a new external drive (they are cheap), format it Mac OS extended (journaled), and put your iMovie library on that drive. Keep your time capsule backups on a separate dedicated drive.
Best,
Rich