As I understand the OP he is talking about a networked hard drive, not an external one. The client doesn't know what file system is used on the server's hard drive, they just know how it is networked (Samba, NTFS, whatever).
Sorry... after rereading the OP's question it appears that you are right. The drive needs to be locally attached in order to format. If this is a NAS you can't use Mac OS X file system as the vast majority of them use Linux OS.