Time Machine cannot write to network drive under Mountain Lion
My take from this Apple Discussion thread is that the solution causes Time Machine to create a full new backup rather than adding to the other backups, but previous backups will be kept (not sure of actual behavior). Anyway, here is the posted solution (edited formatting and grammar for readability):


  By default, the WD Sharespace creates a hidden share called WD_Backup
  and a user called wd_backup with a default password of backup.  
  
  Using the example in the blog: 
  
  
    sudo tmutil setdestination afp://user:pass@host/share
  
  
  and assuming the following: (all default settings with the exception of the WD Sharespace Server Name)
  
  
    Server Name: TimeMachine    
    
    Volume Name: DataVolume
    
    User: wd_backup
    
    Password: backup
  
  
  You should execute the following in Terminal:
  
  
    sudo tmutil setdestination afp://wd_backup:backup@TimeMachine/WD_Backup
  
  
  In addition, you can validate that you are using the correct User and Password details by:
  
  
  Launching the Finder and clicking on 'Go' from the menu
  Clicking on 'Connect to Server...'
  Entering: "afp://TimeMachine/WD_Backup" in the Server Address field and clicking 'Connect'
  
  You'll be prompted to enter the Username and Password to the share; the default username and password are stated above.   
  
  
  If your machine cannot resolve the Time Machine Server Name, then replace "TimeMachine" with the IP address of your WD Sharespace server; this will mount a drive to the WD_Backup folder, underwhich you will find the .sparsefile that Time Machine uses to store your backup.  All this is covered in the WD Sharespace User Guide on page 46 under the Time Machine configuration section.


Note that the original poster also wrote:


  However, if entering afp://wd_backup:backup@192.168.1.150/WD_Backup
  instead of afp://192.168.1.150/WD_Backup it gets to mount it from
  the Finder window (Command+K). I have tried this while writing this post,
  because as you were so sure that it worked (even though for me the
  "straightforward" solution does not work) I decided to try this last
  thing!   Right now it is backing up everyting, so thank you very much
  for all your help!


Good luck!