Time Machine is backing up itself?
It would be very strange to have TM back itself up... That said, we can check! Go to System Preferences > Time Machine > [Options...]. The drop down pane that appears has "Exclude these items from backups:" If your external drive is not listed there, it might actually be backing itself up. Click the plus under the list box and try to select your external drive. If it now appears in the list box, click [Save] and try to backup.