Scheduled Database Dump Dilemma

I am fairly new to SQL server and am having a problem getting the SQL backup or "dump" to do what I need it to do. My desired end result is to have a database backup every night to a backup device on the same server as SQL is running, and keep one weeks worth of databases in the backup device, overwriting the database backup from 7 days before. This device is then transferred sometime later to another server using the NT AT scheduler. The first time I tried to accomplish this I used Enterprise manager to schedule a full backup to be run each night at midnight. The backup device was set to be initialized and retained for 7 days. This procedure worked once, the first night. There after it failed. In looking at books on line it said that I needed to change the transact -SQL command from INIT to NOINIT as the INIT instruction was the cause of the failure. I changed the statement in the Scheduled Task manager to NOINIT. That seemed to do the trick as I checked the backup device each of the next few days and saw that it was indeed performing the backup and retainng the databases. A week later I checked the backup device again and found that it is still adding database dumps to the file, but it is not overwriting the dumps that are 7 days old. I am told that I need the INIT statement in the dumpdevice command in order for the RETAIN DAYS = command to kick in. However, this did not work before. I can not continue adding to the dump device as it will get too large and take up too much disk space on the server. The only way I can get the device to a reasonable size is to do a backup and initialize the device, which gets rid of all of the older databases. This seems like a catch 22. Is there any way I can make this work. I am running SQL 6.5 on the latest service pack (5a). Any help would be greatly appreciated.