Why can't Time Machine see shared drive?
When you click the "Options..." button in the File Sharing preferences, is "Share files and folders using AFP" enabled? Time Machine over the network requires AFP, so it won't work if only SMB is enabled.

You may also need to disable SMB. I am not exactly sure why this is the case, but sometimes the SMB share takes priority and Time Machine can't seem to see the AFP share. Note that this will prevent Windows clients from connecting to file shares.