What version of the firmware are you using,
apparently there was a bug in the 1.0 firmware that stopped time machine working
properly if you only had 1 big volume.
If you are already using version 2 and still can't get it to work, there is a trick which involves creating
a sparse bundle file on your mac and copying it to the nas drive.
see
http://www.insanelymac.com/forum/index.php?showtopic=184462
http://www.google.co.uk/search?sourceid=chrome&ie=UTF-8&q=time+machine+snow+leopard+manual+sparse+bundle
for hints.
J.