Once I begin this new backup with Time Machine do I have it correct that the most will ever contain is 150GB, the capacity of the iMac?
Well, over time the BU will get bigger, as it saves versions of things.
Apple Support advised me that the OS which is about 10GB will not be included. Also they advised that TM will backup to tghe maximum capacity of the backup disk...or partition if it's set up. I guess everything is resolved now.
Retrieving data ...