Airport TC saying internal disk not working.

Let's start with which exact model is your Time Capsule (TC)? Regardless, of its model number, how long have you been using this base station?

Since your TC appears to have multiple issues so we will need to tackle them, one at a time.

Starting with the flashing amber status LED.

A persistent, flashing amber light indicates that any of the these potential conditions may require your attention:

• The base station has not yet been configured because it is new, or it has been reset.
• You have selected a security configuration that is not recommended.
• A new firmware update is available for the base station.
• One of several other conditions, such as a disconnected Ethernet cable or invalid IP address has been detected.

Ref:

• About the status light on AirPort base stations - Apple Support
• If your base station's light is flashing - Apple Support

To find out why your TC's status LED is flashing amber:

1. Open AirPort Utility
2. Click on the TC
3. Look for a Status setting in the small window that appears. Note: Status only appears if there is an issue or notification.
4. Click on the small amber dot there and another window will open to explain what the "issue" might be.

If you are not sure what model of Time Capsule that you have.......

Open AirPort Utility on your Mac

Hold down the option key on your Mac while you double-click on the picture of the Time Capsule

A window will appear with information about the Time Capsule. The Model information is at the top of the window

Unfortunately, AirPort Utility is rarely wrong when it reports that the Time Capsule hard drive is not functioning correctly. In all likelihood, the hard drive has failed.

Post back if you want to run a few quick checks to verify this. The model of the Time Capsule would be helpful.