Windows 7: cannot complete backup

on my dell inspiron desktop cannot complete backup. recently had to replace hard drive. set up a 30gb partition for backup but message is that it is insufficient space. backup appears to only require 12gb. what am i doing wrong? running windows 7 64 bit home premium with a 500 gb hard drive.

The default "Backup" will include a system image. You could try going in the Backup & Restore "Change Setting" and select "Let me choose". Then untick create a system image.
I wouldn't be restricting myself to a 30GB partition for backup. Even with file/folder backup Windows will eventually make multiple backup sets which you need to prune using "Manage Space".

Either of the above could be your problem.