One does the following:
Power off the AirPort Time Capsule
Restart your Mac
Power up the AirPort Time Capsule again and let it run for a minute or more
Open AirPort Utility on your Mac (Finder > Applications > Utilities > AirPort Utility)
Click on the AirPort Time Capsule to select it
Click Edit in the smaller window that appears
Click the Base Station menu.....up where you see the other menus like File, Edit, Help, etc
Click on Restore Default Settings
If an error message continues to appear after several attempts, the AirPort Time Capsule is unfortunately defective.