Mac – Does the Time Machine backup disc need to be dedicated

Yes, Time Machine will backup until it fills the backup disk and then it will start overwriting old backups to make way for new ones. However, if the volume of data you've told Time Machine to backup exceeds the size of the disk Time Machine is using to save the backups on, it will complain that the disk is too small. If you have a Time Machine disk which is smaller than the combined size of the hard disks used by your Mac, it's likely you'll need to manually intervene at some stage due to this issue unless you're very diligent about ensuring that you don't ask it to backup too much data.

I wouldn't use Time Machine for this, it is best at backing up your local Mac. The NAS you have has a built in backup function that can use a local USB drive or a network share (as well as other options). So if you want to backup the NAS to a drive mounted on your Mac just set the share up on the Mac then configure the NAS to backup to that share on a schedule. If you really want to use Time Machine you would have to mount the NAS or more likely specific directories on the NAS then include those in Time Machine on the Mac, This article gives good info on backing up several types of network shares to your Mac thru time machine: http://lifehacker.com/5685547/how-to-set-up-time-machine-to-back-up-to-a-networked-windows-or-linux-machine