I have the Airport Extreme AC (tower) and it does recognize the MyBook Live in Time Machine Backup.
Make sure your Airport Extreme is on the latest firmware 7.7.3 (There are only a couple of firmware versions - I believe 7.7.1, 7.7.2 and 7.7.3.
Make sure you MyBook Live is on its latest firware version as well - (for mine this is: MyBookLive 02.43.03-022 : Core F/W) and I don’t believe any newer versions have been released since last October.
Make sure your MyBookLive is set to enable Time Machine Backups. connect to your MyBookLive from a browser - log in to the WebUI/Dashboard. Select Settings / System / Mac Backup. Make sure the Time Machine Backups option is checked. The share selected for backup should be the one called TimeMachine (or possibly TimeMachineBackups) - in either case there should be only one to choose from - and you might not even be allowed to choose. Set the slider at the bottom to limit the amount of disk space to be used by time machine. It will probably default to the full size of the drive.
On your Mac - open Time Machine Preferences and select choose drive. You should see the Time Machine share listed as a backup destination. It will probably be called “Time Machine on MyBookLive” - or whatever name you have given to your MyBook Live.
It should work.
Also - with the Airport Extreme AC - you can plug just about any USB drive (that has been pre-formatted on a Mac as Mac OS Extended Journaled - into the USB port of the Airport Extreme AC. It will work flawlessly with Time Machine - at least that is my experience testing with all of my Western Digital USB drives. I realize this doesn’t solve your MyBook Live issue at hand - but just wanted to point out that Time Machine Backup using a USB drive attached to the Aiport Extreme AC works quite well. If you have an unused USB external drive hanging around - try it out.
Another thing to be aware of (specific to the Airport Extreme AC (tower)) - you will have trouble trying to externally access the FTP Server on MyBook Live. This is a peculiarity/bug with with the Airport Extreme AC that apple has acknowledged but has not yet fixed. The current firmware of the Airport Extreme AC is doing something unusual with port 21 (and not automatically opening the other ports required by FTP correctly).
~Scott
