On the USB drive issue. One needs to ensure the USB drive is in a format that the My Cloud supports. For the single bay My Cloud models the USB drive should be formatted for: NTFS or HFS+ or FAT32. In some cases one may also have to delete all the partitions on the USB drive and re-partition the drive with one single large partition before formatting that partition to one of the three supported formats.
External USB Drive File Systems Supported on a My Cloud
https://support-en.wd.com/app/answers/detail/a_id/19225
One should be able to change the Time Machine save location through the My Cloud Dashboard > Settings > General > Mac Backups > Time Machine > Configure setting. Then select the USB drive Share as the new Time Machine backup Share.
FYI a number of similar past questions on using a USB hard drive attached to the My Cloud for Time Machine backup can be found using the forum search feature, magnifying glass icon upper right.
https://community.wd.com/search?q=time%20machine%20usb%20hard%20drive%20category%3A105
For example, two past discussions:
How to expand Disk size for Time Machine Backups
https://community.wd.com/t/how-to-expand-disk-size-for-time-machine-backups/230284
Time Machine connected to the USB Port
https://community.wd.com/t/time-machine-connected-to-the-usb-port/90994
