Time Machine backups are a nightmare on NAS, however this is what I did with a NetGear Stora:
In Finder -> Go -> Connect to server.
enter your NAS address including username and password, like this:
smb://username:firstname.lastname@example.org/ *or whatever your volume's IP is.*
then select to mount the volume of where you want to keep your sparse bundle image.
Now open the disk utility, and create a sparse bundle with the following settings:
- Name: Backup (or whatever)
- Size: 300GB (or whatever)
- Format: Mac OS Extended (Journaled)
- Encryption: none
- Partition: No partition map
- Image Format: sparse bundle disk image
- Save As: yourcomputername.sparsebundle (e.g.: Toms-MacBook-Pro.sparsebundle)
After you've done all that copy it to your backup volume and open Time Machine's preferences
Click on Select Disk and choose the volume that you want to backup to.
A couple of suggestions:
Follow this screencast that i made to auto mount your volume on start up http://www.youtube.com/watch?v=2vhcmEd0Y8o
Do not upgrade to OSX Lion when it comes out, since at least for my Netgear's Stora the Time Machine did not work and i ended up buying a Time Capsule, check first on the ReadyNAS forums.