I bought a Toshiba external hard disk that came with NTI backup EZ software. When I used the software, I thought it would create a literal mirror image of my hard disk. However, it is creating a file in its own format (.NBF), which can be used to restore my system.

Also, it does a separate backup of "My Documents" folder, which occupies a big space of its own.

My main problem is that the software seems to create an individual back up file, everytime it runs the backup, using an inordinate amount of disk space. I thought it might be backing up only the files that were updated after the last backup.

Do you think it might be safe to delete the older version of the backup files?

try using clonezilla or Mondo for your backup. Though there will be a learning curve (not very steep), these allow you to image your partitions - so if your dox are on a separate partion, you could image it and delete the older one. These packages are EXTREMELY reliable packages and are free. These package can be run on any machine - so they are a good choice for imaging.

For differential backups, you could try rsync (I use rsync but under Linux). Rsync does have windows port (check the rsync homepage) - but I've never used it.