After the replacement, tried Time Machine with an external USB-3 Toshiba drive. Worked fine twice, then the next morning it showed backup errors. The system.log listed file type modification errors. After a Disk Repair, backup functioned OK. Maybe the external drive goes to sleep over night?
Being in backup mode, tried the Control Panel "Backup & Restore" on a Windows computer. Ended in backup errors
c:\windows\system32\config\systemprofile\syncup 0x80070002 The sytem cannot find the file specified
Fix mentioned on http://en.community.dell.com/support-forums/software-os/f/3526/p/19431232/20030578.aspx: Open the Windows navigator. In the left panel, it lists the Windows 7 "Libraries" for Documents, Music, Pictures, Videos. Each one contains a user specific folder like "My Documents", a shared folder and a "Sync Up" entry. Delete the Sync Up entry, and backup works fine.