That is lion in a nutshell.. frustrating.
Download and use the 5.6 utility.. the one in Lion is a toy.
There is no disk page in 6.. which makes it utterly useless.
Open your newly installed 5.6 utility..
Go to manual setup.
Go to the disk page of the TC.
Click on disconnect all users.
Lion should now be able to backup.. if not there could be some other issues.
I hate that infamouse -1 error, because it is often so generic, you can waste a bunch of time trying to isolate it, only finding yourself just starting over with a whole new backup from scratch anyway.
I would have started troubleshooting with Pastenague's first suggestion BTW.. hopefully that's all you have to do.