[dnanian]

If you need a password and the Mac is asleep and wakes, it'll go to sleep too soon for the backup to start.

I recommend in general that you partition a drive if you want to use it for TM and SD (see Help > Frequently Asked Questions). Separate drives is even better so if your backup drive fails you'll have another to fall back on, but may not be practical.

Most applications can be open when SD runs. Active data files, for obvious reasons, can be a problem.