Time Machine failing

Time Machine has been working fine for me for the past three years. It uses a dedicated 2T WD Passport drive connected via USB to my iMac. It's been set to backup automatically since the beginning. As of last night I started getting notifications that the backup failed, and an explanation of "An error occurred while creating the backup folder". Not very helpful! After several attempts to backup manually (without success), I tried Disk Utility to try First Aid on the drive. Got message it couldn't "unmount" the drive. So then I tried to Eject the drive, wouldn't allow. I even turned off the iMac, unplugged the drive, turned on iMac and after it booted, plugged in the drive. It appeared on my Desktop as normal again, but still couldn't do a back up or First Aid again (same error messages as earlier).

Could this be a physical drive failure? It appears OK, light is on (blinking slowly), disk icon appears on Desktop, Time Machine appears on Menu Bar, all "looks" normal.

According to Get Info, there's about 200GB remaining on that drive. Somewhere, I'd seen earlier that Time Machine will automatically erase the oldest backups if it's getting tight on space, and I presume this has happened sometime(s) during the past three years.

I'm running latest version of Mojave OSX 10.14.6 (can't yet go to Catalina as I have some older software than won't run under Catalina -- to be corrected in future).

Otherwise, everything seems to working fine.

I'm also running Parallels Desktop 15, and under that, Windows 10 Home, which seems to be working fine.

•• So, how can I fix the Time Machine problem?____

•• Should I risk reformatting the drive (and losing all that's currently on it)? -- I think I can live with that. I've never had to restore anything in the past. When I look at Time Machine content now and select a file, the Restore button does not 'activate' (remains faded). Don't know if that's significant. Perhaps I couldn't restore now even if I wanted to. Last night if I clicked "Enter Time Machine", several stacked windows appeared, and a 'list' of dates along the right edge of my screen for each update. Now, even though several windows still appear stacked, right edge of my screen still shows short bars but most with no dates (when passing cursor over them) except a very few at the bottom. If I select a specific backup window (even a recent one), it displays many file names (looks normal), but if I select a specific file, as if to restore it, the Restore button does not function (remains dim). Seems like restore would not work. I don't actually want to do a restore at this point, I just want Time Machine to keep backing up my Macintosh HD.

•• At what point should I simply replace the TM drive with a new one?____

All advice appreciated. Thanks!!