WDS settings would not be used on newer "n" devices. WDS is only for older "g" wireless devices, or a "mix" of "n" and "g" devices.
Open AirPort Utiity - select your Time Capsule - Click Manual Setup
Click the Wireless tab located just below the row of icons
Make sure that you have a check mark next to "Allow this network to be extended"
Click Update to save your changes
Perform a Factory Default Reset on the Airport Express, then move it close to your Time Capsule for the configuration.
Open AirPort Utility - Select the AirPort Express - Click Manual Setup
Click the Base Station tab below the icons to assign a name and device password and adjust Time Zone settings
Click the Wireless tab
Wireless Mode = Extend a wireless network
Wireless Network Name = Click the selection box and the name of the Time Capsule wireless network should appear. If it does not appear, enter the exact name of the Time Capsule wireless network by typing it in
Enter a check mark next to Allow Wireless Clients
Wireless Security = Exact same setting as your Time Capsule wireless network
Wireless Password = Same password as your Time Capsule wireless network
Confirm Password
Update to save settings. If your settings are correct, you will have a green light in 40-45 seconds
Unplug the Express and locate at a point that is about 1/2 the distance from the Time Capsule to the general area that needs more wireless coverage.
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