Ok, i got this thing licked. ill try to keep it as simple as possible, especially since it will probably be me that uses this post next time when i forget and run into these problems again in the future.
if you delete the MediaID.bin files both next to, and inside, the root backup folder a new incremental backup will be started the very next time backup is started.
In the root backup folder, if you see a dated folder with the label "Backup Set" , this is your incremental backup archive data set. Inside that is a dated 'Backup Files' folder that contains the compressed files, which are the increments. If you see another 'Backup Set' on the root this is another isolated data set, and is in no way tied to the other data set.
The idea to free up hard drive space assuming you have more than one Backup Set, is to first check to make sure your not missing any important files on your existing active file system. Next go to the backup program, click on 'restore' files, 'browse files' (this is the latest Backup Set) then make sure your most important files are in there too. Once this is verified, then go ahead and click on 'Manage Space' then delete all but the latest old Backup Sets.
Separately, when your deleting old backup sets, if there is an image in there, don't delete it, unless your sure you don't want the copy of the existing operating system as-it-was during what ever era it may have been made. The image is just a copy that 'may' eliminate the need to re install windows in the event of a catastrophe, but this is no guarantee, ESPECIALLY if your backing up to the same hard drive as your system is on.
Some important notes for a multi user environment.
If you initially run the backup from a user, and insert the UAC password to run it, or are backing up to a mapped network drive, it seems as if the permissions for the backup are only for the user that you run. this is two fold, one the file permissions are set for the user that ran the backup, but all backed files WONT be visible to the user, if permissions arent available to the files being backed up to that user.
If you think all your files from "other users" arent being backed up, be sure that your checking from the admin account when you click on "restore my files", or you will NOT see the other users files no matter how you set the permissions, since its running the backup restore for that particular user only.
When your ready to make another increment, delete the MediaID.bin files, and when you want to check if all files have been backed up for a multi user environment, be sure to run the backup restore from the admin account.