requires at least one WDS peer.
This tells us that you have an ancient version of the AirPort Express that will not be able to handle WPA2 Personal security settings.....and that the Time Capsule is set up to work with the AirPort Express.
That means that the Time Capsule is operating now at far less than its capabilities, because it is using long outdated settings to work with the very limited capabilities of the AirPort Express.
So, even if you reset the Time Capsule back to factory defaults and then set it up again as LaPastenague has suggested, at best you will be able to change the security on the Time Capsule.....but.....not on the AirPort Express. So, no gain for your network unless you are prepared to not use the AirPort Express at all.
My advice would be to use the Time Capsule and AirPort Express "as is" for a few more months while you start to look for new mesh products to bring your system up to real world standards. Your version of the AirPort Express is more than 10 years old.....and the average useful life of home products is about 5 years.
Frankly, at this point it is remarkable that the Express will ever power up at all, much less operate. It should have failed long ago. Congrats on your remarkably good luck with the Express.
Start your search by looking at some of the mesh WiFi systems that Apple sells in their stores and online. While Apple sells these products, they do not offer service or support on them, so there is no requirement for you to buy from Apple unless you simply want to do so. Good luck.
Mesh Wi-Fi Networking