Good for you, St.Paddy!
I finally called in the Time Capsule yesterday. In my case, Apple Support in the Netherlands. I am writing down what happened, because it may interest some of you.
I entered the Time Capsule's serial number and got an automatic reply, that probably in my case I would have to pay to have the Time Capsule repaired.
Sounds like nonsense to me, because here a minimum of two year warranty applies and the TC is 20 months old.
I had to wait about 13 minutes before I got a first liner on the phone, I had to wait a while and then he told me I had to speak to a second level help person because there was a special program for the Time Machine.
She told me to go exchange the TC for a new one about 45 minutes away from here. I told her that people on Apple Discussions mentioned Apple was shipping replacements out to their home address, and I live here in the middle of nowhere. She agreed to send the replacement Time Capsule to my home address, and was going to charge my credit card (I had read about that, so that was fine with me), but she also indicated that if any evidence showed of the Time Capsule having been opened, the replacement would be charged to my credit card anyway.
I then said I disagreed, that people on the same Apple Discussions had gotten to keep their hard disk. I have information on that disc from people other than myself and I wanted to have the option of carefully removing the hard disc and keeping it or, if she preferred, I could replace it after extracting the information. According to Apple: `Time Capsule is a revolutionary backup device that works wirelessly with Time Machine in Mac OS X Leopard and Snow Leopard. It automatically backs up everything, so you never have to worry about losing your important files', so I want my backup.
She said if other stores were letting customers keep their hard disc, or allow the hard discs to be removed, or removed it themselves, that was their responsibility. So we were at a stalemate! I said I needed to think it over. And I guess I still am.
The next day, I got an email from Apple, if I would please fill out an survey if I was happy about services being rendered by the last person of Apple Support I spoke to. It also asked if I could recommend Apple products to others. I used to be very enthusiastic about Apple and Apple products, but I can not believe why they would not own up to the problems with the Time Capsule and why they would misinform their customers.