Backing up plus storage questions.

Never good to use a single drive for both data storage and backups. When the drive dies, the all do eventually, you lose data and the entire file system backup. Use 1 external drive for your libraries and a second external drive for Time Machine backups. The backup drive must be large enough to backup the entire file system and have an archive should be months old.

 

If you are going to use time machine to backup your MBP, it can be picky about the destination. You should either use a drive that you plug into your MBP or a Apple approved network product like a Time Capsule, Airport Base station with drive, or server with drives.

You could use your WD cloud device for a backup destination, but I'd use CCC or something like it instead of Time Machine.

That way you can continue to use the WD cloud box for backups and attach a inexpensive 1TB USB drive to it for your library. Use CCC to backup the library disk to the WD cloud disk.

There are a bunch off other ways to skin that Cat.

A more elegant method would be to buy a Time Capsule and use it as the MBP Time Machine backup destination. Put your music library either on the WD cloud or TC and use CCC to back it up to the other device.