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Disk full error

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Hi
I'm sure this has been discussed elsewhere but I have not been able to find a relevant solution anywhere. I have a brand new iMac, running Yosemite, 10.10.4 and have Windows 8.1 with Parallels Desktop 10. I installed the trial version. I am only able to back up around 3% and then I get an error that disk is full. In actuality I have 995.96 GB available and only 250 GB of data to back up. I have a Lacie external TB drive. I am able to put stuff on and off the drive, read and write. It is currently formatted to MS-DOS (FAT32). Is this the best choice for the Mac? Do I reformat?
The Acronis seems like a very promising product but of course I want to try it before buying. See attached screenshots. Again, I apologize if this has been addressed elsewhere. I did try looking.
Thanks
Greg

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