"Disk is full" error with incremental backup

Win7 64
True Image Home 2011, Update 2 (build 6857)

I have an initial file backup on a 1TB drive that is 798GB in size. The drive still shows 132GB available. I attempted to run an incremental backup and know the changes only amounted to a couple hundred MG at most.

According to the backup log, the backup file was created ("Backing up to file...2.tib"). Then the log shows it created another backup file ("Backing up to file...3.tib"), immediately after which it generated "The disk is full" error message. Since I wasn't babysitting it, the process timed out and terminated.

Not only does the error not make sense, but no additional backup files exist. So, my questions are:
why did I get the "Disk is full" error message
why did it try to create a second incremental backup (the 3.tib file)
why did it delete the first incremental backup (the 2.tib file)

Thanks