I understood that you can "see" the Time Capsule when you open AirPort Utility, and if you click on the Time Capsule you are asked for a password, which you do not have because it was lost / forgotten.
In this case, you are stuck, because you cannot access the configuration settings for the Time Capsule.
Follow the instructions that I provided, which will allow you to set up a new password during the new setup, so you will be able to access the settings on the Time Capsule. This won't take more than a few minutes.
Then......when you have the Time Capsule up and running again, post back for additional instructions if you want to erase the data on the hard drive and are not sure how to do this.
In other words, erasing the data on the hard drive is a completely separate operation from erasing the network settings and device password. If you thought that you could erase the network settings and erase the hard drive in one step, this is not correct.