OS X Yosemite install error / Harddrive is used for backups?
I had the same problem. Turned out it had once been used for backups. I removed the folder Backups.backupd in the HD root and everything went fine after that. I assume you have solved it, but I'm writing this in case somebody else have the same problem.

It's unlikely you'll need to go though those complicated steps in the answers above.