Googling around I found that it appears Microsoft does not want us to backup a system image to a NAS drive using the built-in backup routine (which backs up perfectly fine to a NAS drive in Win7).
You can avoid the “Windows cannot read the destination drive” error easily enough by prefixing the logon user name with the device name. My user name is James so in my case I would enter WDMyCloudJames then the password in the next field and it will connect OK but Win8 will still not create the system image on the NAS drive.
It appears the functionality has been blocked by Microsoft for some reasion best known to themselves.
What you can do is create a system image on a (non-NAS) network disk or on a spare spindle on your PC.
If you like you can then copy the folder (its called WindowsImageBackup) onto your NAS drive.
If you examine this folder you’ll see that the next folder down the hierarchy will be called the same as your computer name.
As an aside, if you want to create system images from more than one PC and put them all on the NAS then all you need to do is copy the “computer_name” folder and its subfolders into the WindowsImageBackup folder.
If you need to boot from your recovery disk you’ll see options to restore from the system image and you will be able to choose the one from the NAS.
It’s a bit of a cumbersome workaround; maybe we can use Smartware to make it… smarter; I’ll have a look.
