If you’re reading this, chances are you are running Windows 7 Home Premium and need a workaround for the network backup feature found in Professional (or your previous Vista Home Premium had it). Well guess what? No need to give Microsoft more money for an upgrade, the trick is backing up to a VHD stored on the network. Windows will see your VHD as a normal, internal, drive!
UPDATE! I have added a video! For some reason, people are not able to backup to their VHDs, I do not know what the percentage is, but the VHD must be considerably larger than your total amount of disk space, I believe this to be the issue.
Create a Virtual Hard Drive (VHD)
Login as an administrator and open Computer Management > Disk Management. On the right menu, click More Actions and Create VHD.
Save your VHD to the network location. Set the size of your VHD and select Dynamically Expanding. Click OK.
Initialize the drive by right clicking on it.
Select MBR and click OK.
Create a Simple Volume by right clicking on the drive. Follow the prompts in setting up your VHD.
Depending on your Autorun configuration you may get the Autoplay prompt when the drive is ready. Open Windows Backup, you should now see your VHD as a backup destination.
Automatic Attachment on Startup
Follow our guide on getting your VHDs to attach automatically.