The drive has to first be formatted...after you connect the drive to the iMac go to Applications, Utilities and start Disk Utility. Then when DU has found your disks, the internal and new external, highlight the external - will be obvious by the brand identifier as WD or similar. You can then name the disk if you want.
After selecting the new disk, in DU select Partition from the button bar towards the top of the right panel of the window. Don't need to erase as that will be done when you format.
Now, decide how many partitions you want...if the drive is more than a TB, I would use two partitions...just tell DU that info. Then you can set the size of the partitions by click the first partition image and set size to something like half the drive. The second will then be the remainder. Then for the first partition select the format, the default is HFS+ Extended (Journaled) - don't do case sensitive - and then the partition table should also have GUID as the default. Then just tell it to do the format. Then repeat for the second partition. Give each partition a name so you recognize them on your desktop...something catchy like Backups, and Mac OS X...then when you are done go to System Preferences, Time Machine and as admin turn TM on and tell it to do its thing to the Backups drive.
A handy thing to do then is use cloning software such as Carbon Copy Cloner to make an exact, bootable copy of your startup disk on the other partition you created. CCC now charges $40 for the software but you can download for free to use for 30-days...plenty of time to clone your internal and decide if you like it enough to pay the money.
Anything else that can help?
