For others reading this post, I found that it wasn't quite as easy as the suggested instructions implied, although in general it was 100% the correct approach. Here's what I, and my Apple Care specialist, discovered:
---"None" vs "No Drive"
My computer says "None" as a choice (as opposed to "No Drive"), so this was the obvious choice. Just semantics. Cool so far.
---Automatic off vs manual
Clicking this automatically turned TM off (as opposed to having to manually turn it off per the above instructions). So this may depend on which TM release is on your machine.
---"Format Wars"
After selecting the backup drive in Disk Utility (per Apple you must select the indented icon for your backup disk, not the outer icon) and clicking the erase tab and erase button, I noticed there were several volume format choices (default was "Mac OS Extended (Journaled)" and that the "Install Mac OS 9 Disk Drivers" was checked, which would have made me backup drive an OS 9 startup disk! No brainer to uncheck that box! However, now I didn't trust ANY defaults. Other volume formats listed were "MS-DOS (FAT)", "Mac OS Extended (Case-sensitive", "Mac OS Extended (Case-sensitive, Journaled)", and plain "Mac OS Extended". I was stumped! So I called Apple Care and learned that "Mac OS Extended (Journaled)" should be used unless the data is to be used with a Unix machine, in which case the case-sensitive option might be used (but isn't OS X Unix-based? I muttered). You should probably use the default, was the answer: "Mac OS Extended (Journaled)". Another source confirmed this was the best choice for most users.
---Which erase option?
With Apple still on the phone, we did the default erase (not using the "Security Options"), which erases all the links to the data (but not the data itself). This is quick. If you go into the security options you could chooses "Zero Out Data" to truly erase everything, which takes more time, obviously (note: approx 1 GB per minute in my setup). I experimented with both methods and the result was the same.
---TM failure!
In my case (either erase method), after Disk Utility ran and we tried running TM, we got a red "failed" message in the TM window. Clicking on the the little "i" info button, it said TM couldn't find the disk, even though it was there on the desktop and in the Disk Utility window and in the TM window. We tried dismounting, powering off the external drive, re-mounting and got the same error. Finally, we had choose TM disk set to "None" and then re-choose the backup drive. At last, TM was able to run without the failure!
Thanks Kappy, thanks Apple Care. I hope this post helps others!