From Mac OS X 10.7 Help:
To erase a disk:
If you want to erase an external disk, connect the disk to your computer.
In Disk Utility, select the disk or partition in the list on the left.
Click Erase.
Choose a format from the Format pop-up menu. Usually you will choose
Mac OS Extended (Journaled).
Type a name for the disk or partition.
If you want to prevent the erased files from being recovered, click
Security Options, select the option you want, and click OK.
Click Erase.FYI, I got this by going to
Mac OS X 10.7 Help: Erase a disk and followed the links. The part that I quoted appeared in Disk Utility Help, not at the Apple website.
Once you have erased the disk (it will be formatted at the same time), follow the instructions in
Mac 101: Time Machine. That should the be same as for 10.5 and 10.6.
Time Machine backs up regularly (about once an hour) by default, so you don't have to set anything.
