If you are performing a Safepoint / Backup of the My Cloud contents to the USB external hard drive then that external hard drive has to be the same size or larger than the contents being backed up.
No. But some find it helpful.
No. Any USB external hard drive should work provided it is not encrypted.
Safepoint does that from time to time on my end too. Not sure why. I usually just run a manual backup again and it reports completed. One can check the Alert/Notification messages icon () to see if it reports anything more post backup.
A Safepoint backup simply mirrors the content of your My Cloud to the USB external hard drive. It does not compress or encrypt the backup files. All files can be accessed using a standard file manager like Windows File Explorer or Mac Finder.