I use a Seagate FreeAgent Go USB external drive with my Dell laptop and Win7. It's working very well for me.
Any chance your backup instructions include a specific file that can't be found? For example; 'backup C:/Users/Public/Public Music/One Step Beyond.wma and that file is actually missing, as in can't be found?
0x80070002 "the system cannot find the file specified" is just another way of saying 'something bad" happened. It really means nothing to us.
Please explain better what you were doing, how you were doing it and what you were doing it to.