modem to airport extreme using LAN cable

The wizard would have set up the AirPort in Bridge Mode, so there was no need to make any changes, yet you indicate that you changed the setting on the Time Capsule to Bridge Mode, so something went wrong. You should not have needed to change the Time Capsule to Bridge Mode, since that should have already been the setting on the device.

Without knowing which "blog" you are referring to , it is difficult to know what information was provided.

Regarding ignoring warning, yes, the issue doesn't go away, which is Internet connectivity.

Here again, something went wrong during the setup, since the correct setup would have provided an Internet connection to the Time Capsule. You should have seen a green light after the setup was complete and no further action should have been needed.

Please follow the steps below very carefully

Connect an Ethernet cable......that you know is working correctly.......from one of the LAN <--> ports on the NBN modem/router to the WAN "O" port on the AirPort Time Capsule.

Power up the Time Capsule and let it run for a minute

Hold in the reset button on the back of the Time Capsule for 7-8 seconds, then release

Allow a full minute for the Time Capsule to restart to a slow, blinking amber light status

Click the WiFi menu at the top of the Mac's screen

Look for a listing of New AirPort Base Station

Click directly on Time Capsule under that listing

When you click on Time Capsule, the AirPort Utility setup "wizard" will open up and take a few seconds to analyze the network, then display a screen that looks exactly like the example below, except that you will see a Time Capsule displayed, not an AirPort Express

Network Name........Type in a name that you want the Time Capsule to use. Later, if you do not need that network because you plan to use the NBN Wi-Fi, you can turn off the Wi-Fi function on the Time Capsule.

Base Station Name......Type in a name for the Time Capsule device

Password.......Type in a password to be used with the Time Capsule

Verify......Type in the same password again to confirm

Click Next......and the setup wizard will configure the Time Capsule with the correct settings. At the end of the process, you should see a message of Setup Complete and there will be a green light on the Time Capsule.

If that is not the case, power off the Time Capsule

Power off the NBN modem/router and wait a minute

Power up the NBN modem/router and let it run a few minutes

Power up the Time Capsule again

Check to see if devices can connect to the WiFi from the Time Capsule and connect to the Internet.

We will assume that your "modem" is really a modem/router or gateway device that has more than one Ethernet port, correct? If yes, so far everything that you are telling us indicates that......

1) The LAN Ethernet cable is not working correctly

2) The setup sequence is not correct

3) The AirPort is defective

So, the first thing to check is connect your Mac or another computer directly to the LAN cable, temporarily turn off the WiFi on the Mac, and see if the Mac can get a good Internet connection that way. If it can, then this tells you that the LAN connection is working correctly and we can proceed to 2) above.

Please post back on your progress

For Setup sequence, I tried several options available on the net. The Apple support document doesn't talk about anything to set in bridge mode. I had googled to find if the bridge mode is really the one I should use or any other option but not much of a help.

If you use the AirPort Utility setup "wizard", to set up the AirPort Extreme.....(you mention Time Capsule as well, so not sure which device you have)......the application will automatically apply the correct settings, including Bridge Mode if required, so you do not have to worry about which setting to use or go back in and manually change settings.

I did the steps of ignoring the warning via Airport utility. Once done, the light changes to green (well, no more pending warning, all acknowledged) and the network appears on my mac/windows/phone.

What warning was that? "Ignoring" an issue won't make it go away.

My suggestion would be start over again and set up the AirPort using the setup "wizard", since it will automatically apply the correct settings based on its scan of the network for other devices.

Post back if you want to give that a try.