Time Machine Backing up entire HD daily

What you're seeing is normal, but you're misinterpreting it. Time Machine only creates true copies of files which have changed since the last backup. For all other files, which didn't change, it creates links to the last changed backup version. So don't rely on trawling through the TM files - you should always access them through the Time Machine interface, anyway.

Matt

When I enter time machine, I can only retrieve hourly files from yesterday. Anything beyond that only lets me go day by day.

This is how TM is designed to work, see for instance [here|http://www.apple.com/macosx/features/timemachine.html]:

*Anatomy of a backup.*
For the initial backup, Time Machine copies the entire contents of the computer to your backup drive. It copies every file exactly (without compression), skipping caches and other files that aren’t required to restore your Mac to its original state. Following the initial backup, Time Machine makes only incremental backups — copying just the files that have changed since the previous backup. Time Machine creates links to any unchanged files, so when you travel back in time you see the entire contents of your Mac on a given day.

*Timing is everything.*
Every hour, every day, an incremental backup of your Mac is made automatically as long as your backup drive is attached to your Mac. Time Machine saves the hourly backups for the past 24 hours, daily backups for the past month, and weekly backups for everything older than a month. Only files created and then deleted before the next hourly backup will not be included in the long term. Put another way: You’re well covered.

/p