Can any Mac guy help a Mac Newbie with a wireless setup of TimeMachine

I have an external hard drive wirelessly connected through my router, my mac can see it, but when i try through preferences to share it, then it cannot see it, but my finder sees the drive and accesses it without problems.

Anyway..

when i start up time machine, it allows me to "select disk" but it does not see the external hard drive connected to my router.

What is the problem, why can my mac use this drive but TimeMachine does not see it?

I'm not at my Mac so having to do this from memory so I may be a bit off.
First, mount the hard drive you want to use for TimeMachine

Go to System Preferences>Users

You will have to click on the lock and enter your password to make changes. Then drag the mounted hard drive into your login startup items. After that, TimeMachine should see it.