Start over with a factory reset.
The Factory Reset Gen1-4.
Unplug your TC. Hold in reset. and power the TC back on.. without releasing reset for about 10sec. When the status light flashes rapidly; release it.
Be Gentle! Feel the switch click on. It has a positive feel.. add no more pressure after that.
TC will reboot after a couple of minutes with default factory settings and will wipe out previous configurations.
No files are deleted on the hard disk.. No reset of the TC deletes files.. to do that you use erase from the airport utility.
Setup the TC again, this time using all short names, no spaces and pure alphanumeric characters.
You can do this in complete isolation with the TC plugged into the Snow Leopard computer using 5.6 utility.
Do not set any limitations to access of the TC disk.. in fact I recommend you turn on the guest account to read and write. This can help with permissions issues.
Make sure once you have finished that you set the TC to bridge mode and plug it back into the new AC AE.
Ensure you have ipv6 setup on the SL computer to local link.. this is important and maybe key to the problem.
Check that you can mount the disk in SL.
Reset TM following A4 here. http://pondini.org/TM/Troubleshooting.html
If you find it important to maintain these old backups, do archive the existing disk in the TC.. it is now 5years old.. and it can die in its sleep.. old age.. dementia.. sudden heart attack.
"Interesting sidebar is that I can browse the network and connect to the TC without problem through the finder."
-for this reason I wasn't convinced the problem was a permissions one, but then again I didn't have any idea if the TM component used a different account than my user account in the Finder so I couldn't rule it out.
In the end a rebuild after factory reset did the trick and I am backing up once again.
a few other misc points. My gen1 TM is on its 3rd HDD and now has an external power supply so i'm not afraid of it dying due to age as my oldest backup is now about 2 years. Also, the SL computer does not offer a LINK-LOCAL IPV6 config option: just automatic or manual.
During my reset I think I did it about 4 times starting with a restoration of the TC config file from a backup. I wasn't sure what was in there but perhaps the bad permissions were part of it. I couldn't get two different restoration attempts to work even though I modified one of them considerably and in the end the main contributor might have been the fact that my TC name had a SPACE in it. I now have a name without SPACES. Two different attempts proved successful when the name was without SPACES.
My gen1 TM is on its 3rd HDD and now has an external power supply so i'm not afraid of it dying due to age
Excellent.. the rest of the hardware in the Gen1 is very reliable but the power supply is terrible.
Also, the SL computer does not offer a LINK-LOCAL IPV6 config option: just automatic or manual.
Ahhh.. true .. I have now been on Mountain Lion long enough to be corrupted.
I wonder what effect that has on running later versions of the TC.. because Apple clearly state it should be set to local link (link local is actually more correct).
Although they say it is only for the 6.3 utility to work.. it does seem to have issues with file transfer as well.