How did you erase it? If you used the Trash, did you remember to empty it?
(And then the light came on...) I'm going to guess you erased the partition you were not using for Time Machine, and the TM partition free space remained unchanged. TM will not backup across partitions, so you would need to delete the unused partition, then add the free space to the Time Machine partition.
If possible, you should make an image backup of your internal drive on a second external, before making any partition changes to your external drive (under the 'stuff' happens rules).