Time Machine wiped my external drive despite pressing "Don't Use"
Here is the answer I got on the Apple Support Forums:


  Time Machine does NOT format drives, that I know of. If you connect a drive that is not formatted Mac extended TM should pop up a warning that it can't use that drive for its backup but it should Not indicriminately Format the drive.
  
  I agree with Thomas that the drive is failing or has failed. More then likely if you copy data to that drive it will become corrupted. Time to get a new drive and throw that one in the trash.