Network ready external hard drive setup??

Between my two college students and myself our family has three macbooks. I purchased an iomega 1 TB network hard drive. It said it was compatible with the mac. I plugged it into my wireless router. I can see it in my finder under the shared section where my kids computers show up. I can not use time machine to back up to the external drive. Can anyone help me configure this so we can all back up to the drive as a network? Thank you.