What’s happening is the Files app can see your SMB share, but the backup service only accepts paths that are actually mounted. Your /media/192.168.31.1/... looks right, but it’s not being treated as a real mount, so it gets rejected.
So you’re not doing anything wrong.
On my setup, I mounted the SMB share properly so it shows up as a normal /media/... mount, and backups have been working flawlessly since.
If you don’t want to go that route, the other option is backing up locally first, then syncing it across.
And yeah, even on 1.6.1 this still pops up, feels like the backup service just hasn’t caught up with how network paths are handled yet.