What happens with my external drive upon using Time Machine?
Two things happen:
- Time Machine sees if the format is acceptable and makes a change to enforce enhanced security on that drive if needed.
- Time Machine makes a folder named Backups.backupdb if needed and makes a folder for each machine that uses that drive.
Assuming you don't have a Backups.backupdb folder - then everything on the drive won't be touched by Time Machine. If the drive isn't in a mac format, you may be asked to erase the drive and reformat it. Do use care and read any messages carefully before you start that first backup.
Full details on this is at http://support.apple.com/kb/HT1427 - look for the section titled Changing your backup disk about a quarter of the way down for the restrictions on which format drives are supported and which need to be erased.
While using the drive for additional purposes isn't recommended for various reasons (mostly simplicity; Time Machine's estimates of available space and corresponding expiration of backups will be off if something else is writing unrelated data to it at the same time), it can be done. The backups are written to a particular directory (Backups.backupdb/machine, for whatever the name of the machine is), and nothing outside of that directory, including Time Machine backups from other machines and non-Time Machine files, will be touched. (Also, if Time Machine sees something out there that is named the same as the current machine but doesn't actually appear to be related, such as a backup from a past install with the same machine name, it will retain it instead of overwriting it; or if it believes that the backup is related but isn't in its local database, it will ask you whether to preserve the existing backup or append to it.)