Now what? If this is your problem and you have upgraded to Mac OS X Lion, there is a workaround… Keep reading.
You open Time Machine Preferences and the only way you can add a non-local disk is via a Time Capsule or AirPort-connected storage.
You want to make use of this disk space to store your Time Machine backups. Let’s say you have a home NAS (Network Area Storage), a router with a hard drive, or even an old Windows machine with a lot of disk space lying around.