To backup up the previous note, I too managed to get a NAS box which did not support drive letters to work as a DLO storage location. We opted for a Buffalo Linkstation NAS device and the only way I could get this to work was by creating individual shares for each user's storage location and applying permissions for that user only, based on their AD account (and also of course domain admins or the DLO admin account).
The only functionality I can see that is lost by using a NAS device like this is that DLO cannot automatically create folders for each configured user and assign permissions to them, like it would on a single Windows-based share. So as far I as I have seen so far, everything works just fine.
I have to say I was a bit disappointed with Symantec at the lack of clarity on this subject - I used this article,
http://seer.entsupport.symantec.com/docs/299625.htm, on supported DLO storage locations as the basis for choosing a NAS box and given that the Buffalo device ticked the box for "Windows-networking accessible NAS Devices" and supported AD integration and permissions I thought this would be fine.