Now that I have a VELOP router I'm not sure how I can put a B/U disk on that network and access wirelessly through Time Machine. Let me know how to do that when you get a chance.
I would be amazed if the Velop router would support Time Machine backups to a USB drive connected to the Velop router. Very few routers will support Time Machine this way. Some that will are the Synology router and the upper end routers from Asus.
It won't hurt to try connecting a USB drive to the port on the Velop router to see if Time Machine will recognize it, but like I said......it is extremely unlikely that it will, since Velop makes no mention of Time Machine support in their product literature or specifications.
You could also post on a Velop support forum to ask about this though to get some more opinions.
While in-progress APU flashed a warning every so often that "this device may be overheating."
This message confirms that it is the internal fan that is the real culprit making the grinding noises, since hard drives tend to "click and clack" when they are failing.
The fan is likely clogged with dust or the motor bearings are wearing out, or both might be true. As it stands, the fan can't keep the internal electronics cool enough because it cannot move enough air.
Unfortunately, it is a job for a service pro to open up the Time Capsule to get at the internal components, since the TC was never designed to be serviced. The product is inclined to literally self-destruct if you try to open up the TC and don't know exactly what you are doing. A replacement fan will cost about $20-25, but the labor will be probably be in the range of $150-200 or more.