Hello there, @rltidd27.

If you put a checkmark in the box and set up a number, this will limit the number of backups of your company file. 

I tried to replicate this in my end and set the number limit into 2, also try to create a backup copy three times, and a warning window pops up requesting to delete one copy. 

 Please see the screenshot below.

If you still got the same result, I recommend contacting our support team. They have the proper tools where you can have a screen sharing to pinpoint the cause of this issue.

Here’s how:

1. Login to your QuickBooks Desktop and click the Help tab on the upper right corner.
2. Select QuickBooks Desktop Help.
3. In the Have a Question window, click the Contact Us link. Then, select any topics.
4. Under Here's how to connect with a QuickBooks expert section, click the Get Phone Number button.

If you want to save you backup copies of your company file online and save space on your computer, you can check out this article to know more about Intuit Data Protect: Common questions about Intuit Data Protect.

Let me know if you need further assistance. I am always here to help. Keep safe.