MacOS – Will a USB 2.0 5400RPM External HDD for Time Machine slow down the SSD

The Time Machine drive should be equal to or larger than the drive that it backs up. TM images the drive completely, then saves incremental changes. Time Machine saves the hourly backups for the past 24 hours, daily backups for the past month, and weekly backups for everything older than a month.

If your internal is 500GB with 100GB free (using 400GB), and your TM is 500GB, then you will get a full image, and then some amount of history (filling up the remaining 100GB of the TM disk). The history length depends on your use habits.

• Change a few small files occasionally? Lots of history.
• Change lots of big files a lot? Then the 100GB free will save a few hours or days.

If you have a bigger TM, you will have a longer history to browse.

I personally have a mostly full internal, an equal sized TM, and change files quite often, and find that I usually have a few months of history. Plenty of time to restore a file I accidentally delete.

You can't backup to an NTFS formatted disk as stated below:

Note: Every available disk that can be used to store backups is listed. If you’ve partitioned a disk, the available partitions are listed. Time Machine can’t back up to an external disk that's connected to an AirPort Extreme, or to an iPod, iDisk, or a disk formatted for Microsoft Windows (NTFS or FAT format). If you select an NTFS or FAT-formatted disk, Time Machine prompts you to reformat the disk. Choose a different disk or reformat the disk in Mac OS Extended (Journaled) format. Because reformatting erases any files on the disk, only do this if you no longer need the files or if you have copies of them on a different disk.

This quote is from the apple support page for Time Machine

You could always reformat the disk in Mac OS Extended (Journaled) format which would allow you to use it.