You backup server can act as a storage in your case. What do your mean by

Does networker automatically pick up to use DSA settings when writing to an AFTD device ?

To set up a NDMP-DSA backup create a client instance with the name of the datamover, Backup command as "nsrndmp_save -T dump -M" and Application information as follows

HIST=y

UPDATE=y

DIRECT=y

also ensure you have mentioned the ndmp user and password in the "Apps & Modules" window. Assign the group that contains your NDMP client to a pool with the AFTD as the target device.