Hello kbtb,
The fact you have come here and the fact that I and others are reading your posts is testament to Apple's bewilderment about the TC problems. You are among knowing company here. We have all lost TC function and to a greater or lesser extent been left high and dry by Apple.
The argument that the TC is a back-up device and therefore you should already have the files to hand on your primary computer (probably a Mac) is most of the time correct. We read here of dozens of people whose TCs have faded away, being offered new for old (well, refurbished for old) units and we never hear from them again. We must assume they start from square one and back-up everything from the beginning again, thinking themselves lucky that nothing significant was lost on the way.
Your plight however, is exactly the situation that was never planned for and is a public relations minefield area being tip-toed through by Apple, who wish it would all go away.
At this point in any of my posts, I will rant away about the failings of the TC design, rather like old technology, a stuck record. This apparently is funny, or so people have told me, and I do do it with tongue firmly planted in my cheek.
I am really effective at getting Apple to change direction and correct the faults, in the same way that a comedy satirist can overthrow governments.
However, a few helpful facts...
1. Your hard drive (supposedly 'server grade' - that's a laugh) is almost for sure, completely unharmed. It is merely sat inside a dead TC case.
2. To get information from the drive the case must be opened, so you can remove it.
3. The 'fault' within the TC, again almost certainly, will be the PSU (power supply unit) that has died through heatstroke, killing about 4x components inside.
4. The components have died not because they are cheap and rubbishy but because the case is not cooled by ventilation - they have literally cooked themselves in their own heat.
5. Unless the fundamental flaw in the TC design is fixed, it is highly likely that even a refurbished unit (the replacement unit offered) will suffer the same ignominious death about 1 to 2 years down the line. Repeat ad nauseum.
To recover your data, you must get the TC opened up and the drive connections disconnected. This is a plug and socket arrangement that any person with an ability to walk and chew gum at the same time could rightly do.
To fix your TC costs about the same as a tank of fuel for your car, you should not have to pay I agree but Apple will simply not even sanction 3rd party intervention.
There are some repairers of TCs 'out there' in the world. Some are professional and probably offer a good job - they would have to, to remain in business, although the 'Barnum principle' would apply to most one-offs like a TC repair.
There are a few TC repairers from Ray Haverfield's worldwide listing, whose work I have stumbled upon in the UK (from where I hale, you can tell by my accent) and I would not trust them to screw in a light bulb - if you're reading this, shame on you!
http://sites.google.com/site/lapastenague/a-deconstruction-of-routers-and-modems /apple-time-capsule-repairers
is the link that will let you choose who will be of help.
A few of these people will also 'modify' the TC so it remains cool running and not sit there like a coffee warmer. Thus avoiding the problem that caused the failure in the first place.
Come back and tell us your choice and the result. The best of luck.
Kind regards,
Chris Fackrell
York,
UK.