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Time Machine Updates 1.0 Fixed the problem
Authored by: adamcr on Sun, Apr 6 2008 at 10:11AM PDT
This problem has now been fixed with Apple's latest Time Machine and AirPort Updates v1.0. Time Machine will now compact the sparse bundle after it deletes an old backup to make sure it has the right amount of free space. I've posted my logs to show the new behaviour.

Cheers,

Adam

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