What is the distance between the Time Capsule (TC) and the AirPort Express Base Station (AX)? Are they in the same room, different room, different floor from each other? If in different rooms/floors, what is the basic building material used in the walls/floors/ceilings?
It is important to understand that the AX can only extend the TC's wireless network at the same bandwidth that it receives it. If you are only getting around .2 Mbps at the AX, then either there is too much distance between routers or there is some form of Wi-Fi interference (other Wi-Fis or the builiding material) between them that is preventing the AX from getting a strong enough signal to extend.
Changing channels is one possible solution. You would do so using the AirPort Utility. If you are using version 5.x of that utility, you would change channels as follows: AirPort Utility > Select the AX > Manual Setup > AirPort > Wireless tab > Channel. By default Channel is set to "Automatic." Click on the up/down arrow to the right of the Channel window to get the other channel options.
If this doesn't resolve the problem, please check out the following AirPort User Tip for details on how to best place each base station for maximum bandwidth in an extended network.