Yup I don't have a Time Capsule, only mentioned it above as that was what the possible instruction said. I have a WD My Passport that has been formatted by Time Machine to work on a mac.
Disk Utility (didn't know about that). It does show the drive and when I click 'verify' it is telling me that the disk needs to be repaired so I guess I should press the appropriate button and hopefully that will work. I'll let you know how I get on.
Just to clarify - Time Machine should just take back ups when it is physically plugged into the Mac - I don't need to do anything else to make it happen?
Thanks for your input people. I still find my Mac a complete mystery at times, but I'm learning.
The drive has malfunctioned. Sometimes that happens because of a bad cable, but usually it's the drive. The first thing you should do is back up to another drive. As this experience shows, you need more than one backup to be safe. Imagine what would have happened if your primary drive had crashed, and you found out only then that you had no backups.
So after backing up to another drive, you can try erasing the old one. Personally I would never trust it again. If you want to continue using it, keep a close eye on it, and if it ever acts up again in any way, take it to be recycled, or get it replaced under warranty if applicable.
For instructions on how to erase the drive, see the built-in Disk Utility help (under the Help menu.)