This will appear on your system as D: and you will need to ensure that you have at least several gigabytes of spare space available on it. If you do not have a 2nd partition or you need to create a larger partition then you can use Windows Vista or 7 Disk Manager to delete, extend or shrink partitions. The Backup partition can be NTFS (preferred) or FAT32 and it can be a primary basic partition or a logical partition.
If you have a Windows XP system, you can download and use the free utility EaSeus Partition Master Home Edition.