Ethernet Hard drive

I have a ethernet hard drive that I have been using for back up to my mac book. The problem I have is I can only set it up to use 140 gb of my hard drive since that is all that is left on my mac book drive. I was wondering if there is away for me to use more of my ethernet drive? They way I set it up was to go into disk utility and create a new spares drive and when I do that is where it only lets me make it about 140gb.

I have got to reading some more and I was wondering even though you create a disk image does it actually use that size or will it just keep going till it fills the drive. If I understand it correct you eject the disk but you are using the file to get time machine to start.