Are you using a External Hard drive to back up your windows 7 machine to ?
The target device / partition which you intend to use for backup should be a bit more then the size you are backing up ;
for e.g. if your OS partition ( C:\) is 60GB and the used space on it is 40GB then you should atleast have 60GB on it ; it is always recommended to have more space on backup partitions as data grows
I created a windows 7 system image of just the OS partition with apps installed and it came up to 20GB (the used space was 30Gb and the partition total space was 60GB) it compresses itself too while backing up.
It depends on the size of the partition you have, used space ; you can then create a say "60GB partition for backup on external usb drive"
http://lifehacker.com/5144757/first-look-at-windows-7s-backup-and-restore-center
http://www.neowin.net/news/main/09/01/18/windows-7-windows-backup-overview
