I'm currently backing up to Synology NAS with no issues but I did not create a new disk image, Sierra was installed on top of El Cap and reusing the previous images.
I am however on DSM 6.0-7321 Update 7 right now. I'm going to update and see if the issue is with 7393.
Just found that if I mount the disk through Finder, Go, Connect to Server, and then start Time Machine it will connect without the error message and backup.