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Originally Posted by Ted Todorov
Is there a firmware upgrade or something else you need to do to the base station itself, or do you just need instal the Software Update on your Mac?
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From the Airport Utility, you have to click the button noting the 7.3.1 firmware update to have that installed.
Then, another change. Under the Finder sidebar section where other network devices are seen (like my wife's Mac) was my AEBS. I had to connect to it. (Previously an airdisk just appeared as a regular drive).
After doing that, an Airdisk was recognized by Time Machine.