In this situation:
Enough tension is applied towards the right on $m_2$ so that $m_1$ starts sliding backwards.
I am confused about what the free body diagram for $m_1$ looks like.
The net force in the $x$ direction on $m_1$ is negative, right? Otherwise the box wouldn't be sliding backwards.
Best Answer
This is a very good question that addresses a common misconception.
Short answer: The box $m_1$ does NOT slide backward. The friction force in the $+x$ direction causes the box 1 to slide forward, but not fast enough to keep up with the larger box 2. There are no backward force in the x-direction - there is only the forward friction force in the +x direction.
Be careful with your free body diagram. You should only show the forces applied directly on box 1. The tension force is applied on a different body (e.g. Box 2), so it plays no role in describing the motion of Box 1.