Need Help Installing Time Capsule

I just bought a 1TB Time Capsule to go along with my 24" iMac.
I already have a home network where my Desktop Mac, Desktop PC and Laptop all connect through the net and to each other through a D-Link Wireless Router.

On the Time Capsule papers, it is recommended to connect the Time Capsule with the router.
1) Can someone explain why this should be done?

I can understand the benefit of a possibly stronger signal but is there another reason to connect the Time Capsule to the Wireless Router (via Ethernet Cable)?

Anyway, I have connected the two together and then I turned on the Time capsule for the first time.

Let's forget about Time Machine (Backup) for now.

First thing it did was ask me to do a firmware update which I did.

Then it asked me to choose one of three choices (through Airport Utility):
1) I have a wireless network and want to add Time Capsule or replace an existing device on my network.
2) I don't have a wireless network and I want to create one
3) I want to connect Time Capsule to my computer or network using Ethernet.

I chose option 1 as I figured that I'm ADDING something to my network or that I may be replacing my router in some alternate sense.

The next screen asked me 3 more questions...

1) I want to replace an existing base station or wireless router with Time Capsule.
2) I want Time Capsule to wirelessly join my current network
3) I want to connect Time Capsule to my network using Ethernet to extend my current network or create a second network.

This is a harder set of questions as in one way or another, all 3 seem to fit my setup.

I wish to connect to the Time Capsule and then the Wireless Router through all my computers. The Wirelss Router is connected to the Time Capsule through Ethernet so option 3 may seem valid.

Option 1 is valid if it is deemed that I am actually replacing my wireless router now with the Time Capsule.

I chose option 2 as that was the most simplest option.
I don't know if this is correct but this is my understanding that I'm just JOINING the Time Capsule to my current setup.

Then it asked me to select the Network Name. So I selected the Wireless Router name from the Drop Down Box. I hope this was the right thing to do.

Once I chose the wireless router, it asked me to select the WEP key but it gave me several choices:

WEP 40 bit
WEP 128 bit
WEP (Transitional Security Network)

Which one do I choose for a standard 10 digit hex key?

I chose 40 bit first time around and I chose the Transitional Security Network 2nd time around.

I entered my WEP key and then continued to update the settings.

It did it's thing and then it restarted the Time Capsule but when it came back on, it said that there was an error setting up the Time Capsule.

I have checked the cables and made sure everything is connected properly.

Can someone please help me understand the logic behind all of the choices above and also why I am unable to set it up? How can I get passed this error?

I have reset the Time Capsule several times now by pressing the reset button for 5 seconds.

Appreciate the help,

JH

The next screen asked me 3 more questions...

1) I want to replace an existing base station or wireless router with Time Capsule.
2) I want Time Capsule to wirelessly join my current network
3) I want to connect Time Capsule to my network using Ethernet to extend my current network or create a second network.

Click to expand...

First of all - if you've connected it via ethernet you probably aren't trying to make it wirelessly join the network. You're connecting it using ethernet to extend your current network.

As for the WEP password - I don't know which you need - if you take a look at the settings of the router can't you find out or possibly change it to one of the options?

Thirdly - to reset all the settings on the Time Capsule you need to press and hold the small button until the light flashes rapidly, then hold for about 5 more longer before releasing.

I don't really know why you need to connect it to your router - I didn't. I set up a new network because I was having some problems with mine anyway, and threw my old one out the window - gladly!

Just another thought - can you turn off the router, use the TC to set up a new network on it's own and then add the other router to the new network, if you so wish?

I'm one of those people that tries everything a million ways until it works...