I didn't realize my profile stated otherwise.
Please check near the bottom of your original post above to see OS X (10.7.2). You might want to update that to avoid confusion and save some time in the future.
OK, please take a deep breath.
Apple does not officially support Time Machine backups to a drive at the USB port of the AirPort Extreme....likely because it is not reliable. You might want to review this Apple Support document to confirm:
http://support.apple.com/kb/HT2038
So, we are not going to be able to provide you with much assistance on that issue.
Some users seem to be able to make this work....some have some problems....and some (like me) who have tried this have nothing but problems.
Sorry, I can't help on this one, but maybe another user who has had better luck will post to provide his secrets.
The iTunes and iPhoto libraries and files are my only copies now. I moved everything from my Macbook to the external then deleted the originals.
Not sure if you have thought about this.
If you deleted the "originals", then your only copy of your data is on one hard drive. You have no backups if the drive has a problem.
A minimum backup plan would be to have a copy of important data on two different drives. When....not if...one drive fails, you have the data on the "other" drive.
You have no "other" drive according to the information that you have provided.
Further.....Time Machine backs up the changes on your Mac. At some point....you cannot know when.....Time Machine will pick up the change on your Mac and delete the iTunes and iPhoto data from your Time Machine backups.
The files might stay there a few months, or even longer. But, I have seen instances where the files were deleted within a week or two.
So my advice would be to only delete data from your Mac that you can afford to lose.