Looking for something to backup a Windows 7 machine to an internal and external HD. File level backup with full and incremental options.
You can have one or the other. Incremental and differential backups need additional information to function properly, unless no files are ever renamed, moved, or deleted. Renames and moves can be handled by added logic in the backup/sync program, but deletes require more than a file-based backup can do.
Rsync, Time Machine, and Windows 8's File History can offer some of what you're looking for, but of course none are in Windows 7.
Now, if you do only mean copying changed files, and not synchronizing deletions, moves, or renames (at least not guaranteed), then there are options that can just use loose files, including Create Synchronicity, and the ages-old Karen's Replicator.
I always seem to need it running as a service, so still use Cobian. While reliable, and offering CRC checks on what it does, it's flag-based handling of differential and incremental backups, instead of keeping a file attribute DB, makes them practically useless, so I would only recommend it for full backups, to run on schedule (not, "maybe on schedule, if someone is logged on"), and when having logs that can help troubleshoot problems arising later on would be nice to have.