How can I use my existing Time Machine drive on the network?
You'll need to convert your current local-style Time Machine into a sparsebundle before it will be usable in TM over the network. You'll need some temporary storage somewhere to create your converted backup into during this conversion.

I don't know the exact conversion procedure but here are some Google'd links:
http://www.tidbits.com/Talk/1960
http://jason-townsend.blogspot.com/2008/08/how-to-transfer-local-time-machine.html

Something along the lines of hdiutil convert -format UDSB