Did you have to do anything special or particular to make this work? I can't get Time Machine to accept my external when it's connected via wireless network. It works fine on each machine while connected physically, but then over the network it says the drive is not formatted correctly (which it is).
Well, what I did was as follows:
Connected drive (a MyBook, BTW) to Macbook Pro and tried to use Disk Utility to format it as Mac JFS format. Found out that there is a problem with Disk Utility formatting disks larger than 500GB. Thus I partitioned it into two logical drives; one being 600GB for my backup (I have two external drives on my MBP one being 250GB, the other 80GB in addition to the 160MB internal) the other 400GB for my wife's Macbook, which has a single 120GB drive to back up. Formatted those logicals as Mac OS Extended (Journaled) format.
Hooked this up to Mac Mini, shared them over the network and set up users to allow it to be seen over the network. Connected them to MBP with the Go->Connect to server and entering the IP of the Mac Mini so the drive showed up on my desktop (the two shares are named "Walker's Time Machine Backup" and "Jessica's Time Machine Backup" respectively.)
Told Time Machine to use "Walker's Time Machine Backup" as it's external backup volume. Started backup, and quickly realized that this was going to take about two weeks over the network so screw that. Abort backup and tell Time Machine to slag off for a bit.
Hooked up MyBook directly to my MBP via USB, told Time Machine to use this volume to do the backup, which initially would be a full (oh, and I deleted the backup that had been started on that partition; it's just a big file) and let that go. Took about 3 hours. Awhile, but not unreasonable.
Did the same with my wife's Macbook. Her initial full backup being to the "Jessica's Time Machine Backup" partition.
Plugged MyBook back into Mac Mini and shared the partitions. On MBP connected to share, told Time Machine to use
that as the backup volume. On next backup Time Machine did partial incremental backup as if it were hooked up directly since it found the appropriate initial full that I did earlier over USB. Repeat for wife's Macbook to the other partition.
Now it works quietly in the background. When I'm home I connect to the Mini and turn on Time Machine and it just works. When I go to work part of my disconnect ritual after 'disconnect all external stuff', 'throw mouse and power brick into bag', is a step of 'turn time machine off' somewhere between all that and 'disconnect external monitor' before I close the lid and throw it in my bag to take to work. When I get home there is a 'connect to Mac Mini', and 'turn Time Machine back on' after connecting up all the external stuff for the evening. Sounds complex, but it really isn't.
If I have to get the odd file here or there, I can just go into Time Machine and grab the files. If I had to do a full restore, I can grab the MyBook and hook it up directly to whichever Mac needs the full and do the restore. Very convenient. My Mac Mini serves as both my backup server and Media Center in the bedroom. All wireless, all transparent. Pretty cool eh?
Hmm, perhaps this should be a sticky for backing up on an external volume on your wireless network using Time Machine?