Help with Windows XP Backup Utility

I setup Windows XP to backup files I select. I first ran a full backup. Then,
I scheduled incremental backups going forward.

My full backup was 480MB. Now, my incremental backup show as 374MB. I didn't
delete that much email. Also, I set it to overwrite the previous backup
instead of appending to it as appending seems to make the file significantly
larger.

What did I do wrong here?

My desired end result:

I want to backup all of my selected files. Then, going forward, I only want
changes to the files to be backed up and marked as backed up (incremental).

Thanks.