There are a couple things you need to do to get it to work.
First, to allow time machine to use a network drive:
On 1 line:
defaults write com.apple.systempreferences TMShowUnsupportedNetworkVolumes 1
Then mount it... You should see it in the time machine preferences.
Then it still puked all over the place creating the image, had to manually create a sparsebundle image:
on 1 line:
hdiutil create -library SPUD -size 450g -fs Journaled HFS+ -type SPARSEBUNDLE -volname MACBOOK_xxxxxx.sparsebundle
Change the 450g to ths amout of free space on your drive, and the MACBOOK_xxxxxx to your computers name underscore mac address without the colons.
example, if your computer name is "Computer" and you ethernet mac address is 00:12:34:56:78:9A then use Computer_00123456789A
( Don't use your wireless mac address, it will see it as a foreign image )
Move the sparse bundle to the network drive, and start backing up.