might be a crazy idea, but here goes.

1. drop your non-clustered indexes that lots of space
2. do a backup
3. re-create the indexes you dropped

Of course you can only really do this if you database allows for some down-time in the day.

Also, dont drop your clustered indexes as SQL Server will waste a lot of time converting these to a heap.

Does buying that extra disk space seem like an easier solution yet?

Have you considered doing compressed backups? this is a new feature of 2008, it may be an option for you.

might be a crazy idea, but here goes.

1. drop your non-clustered indexes that take up lots of space
2. do a backup
3. re-create the indexes you dropped

Of course you can only really do this if you database allows for some down-time in the day.

Also, dont drop your clustered indexes as SQL Server will waste a lot of time converting these to a heap.

Does buying that extra disk space seem like an easier solution yet?

Have you considered doing compressed backups? this is a new feature of 2008, it may be an option for you.