Mind sharing instructions? I followed those posted in other threads on my latest gen TC and it will not give you a partition option or allow you to create a new disk image....all the options are there but the option to create is grayed out.
http://web.me.com/pondini/Time_Machine/A8.html
1. Let TM start a backup on TC, until the sparse bundle is made, then stop the backup.
2. Follow the instructions from the link above.
Disk utility would only let me create a 900 MB partition, on my 2T TC, but that's ok as my HD files are 250 MB.
So far the partition is working well. I haven't filled the space with backup files yet, but I don't anticipate any problems.
I've moved my media files over to the TC also, and now stream to my iPad and wirelessly to my MBP->HDMI TV....