Can't Set Up Time Machine

I have a Time Capsule set up that is on and running normally, i.e., all our Macs can get on the internet, we can print wirelessly etc. The problem is I can't seem to set up Time Machine. I'm running OS 10.5.8 and Time Capsule is Version 7.6.4. I go to Preferences and open up Time Machine. When I click "Choose Backup" a blank window pops opne with "Set Up Time Capsule" button that I can click on, a Cancel button, and a "Use For Backup" button which is grayed out. So I click on "Set Up Time Capsule" and it takes me through all these windows of settings. I just keep clicking "Continue" to accept settings, and when I get to the last window, I click Finish, but then nothing changes. In the "Choose Backup Disk" window, it is still blank and I cannot choose anything. What's going on? Thanks in advance....

I don't know if this article will help:

How to Back Up Your Mac with Time Machine | Mac|Life

Maybe…give it a read…see if what it describes helps.

- Nick