The short answer is that you probably need to create another volume within the existing container that is on your external USB drive, and share that new volume. The remote TM app on your MacBook will create a "sparsebundle" disk image on that new, shared volume. The disk image will contain all your MacBook backups (it will grow in size).
I think that will solve your problem, although I am mystified by that error message, so the situation could be different from what I think. My TM backups are currently HFS+ so I can't easily test this.
Background: (This is how I understand it, anyway -- open to corrections!)
Note 1: what follows is relevant to recent macOSes where Time Machine is backing up to APFS-formatted storage. TM backups to HFS+ storage have different rules.
Note 2: to understand your own storage, use Disk Utility and make sure you turn on View->Show All Devices. Then when you click on an item on the left, the right pane's second line (just below the bold print) will tell you what type of item it is.
There's a difference between drives, partitions, containers, and volumes. Typically when you "Erase" an external drive you get one partition, with one APFS container, with one APFS volume in that container. You can add as many volumes within the container as you like. By default, all volumes share all the space available to the container*. So if you APFS-format a 1TB physical drive, you could, for example, have one container enclosing two volumes, each volume claiming to be 1TB in size. 1TB of data can be distributed (and re-distributed) in any proportion between the two volumes.
TM on your iMac will not share its (locally-attached) volume with any other app (including a remote TM instance). In fact it appears to be read-only to other apps. However, you can add one or more new volumes to the container, and use them for anything you like. So use DU to create a new volume, call it macbook-TM, and share that volume. This new volume can be encrypted, or not.
On your MacBook, open TM settings and select the (remote) macbook-TM volume as its destination. TM (on the MacBook) will create a sparebundle disk image on 'macbook-TM'. The disk image has its OWN filesystem (since it's a "virtual" drive), which will be APFS-formatted, encrypted or not as per your checkbox setting. All of your MacBook's backups will go to the disk image's APFS volume.
(*) When creating an APFS volume, you can set a "reserve" size and a "quota". Basically, the volume will always be able to store at least reserve-GB available, and will never store more than quota-GB.
I think one potential problem is that both TM instances will try to use as much space on the (physical) drive as they can -- they'll both try to fill their own volume. So one might "hog" most of the space, leaving the other with a shorter backup history than you desire. I believe you could prevent this by using reserve and/or quota. With a 1TB drive, for example, you could specify the new added volume (for the MacBook) to have a reserve (minimum) of 400GB and a quota (max) of 500GB. (My understanding is that these numbers cannot be changed later!)
