This thread helped me. I tried to use an old A1264 wireless-N airport express to extend the wifi network provided by my 4th gen time capsule. i hadn't used the AEX in a long time. The TC was already on 7.6.1, and the express was on 7.5.2, so I had to run the firmware update twice on the AEX to get it to 7.6.1. Once I did that, though, I was unable to get the AEX to extend the network, it could only join it.
After reading this thread, I did a hard reset of the AEX -- holding a pen to the reset button until the AEX blinked rapidly. It took awhile to reboot, but when it did, a whole new screen popped up in Airport Utility 6.1 showing a diagram of the TC and the AEX, saying it was trying to extend the TC network. It asked me to name the AEX, and then it did everything else for me. In Airport Utility, the diagram is now a straight vertical line of Internet globe on top of Time Capsule on top of Airport Express. However, it also dropped the bandwidth from 16-18 Mbps to 5-12 Mbps.
One other thing I did in this exercise was call Apple Support, as I had originally intended to create a WDS wireless distribution system with these two devices. The support guy did some research and told me that time capsules do not support WDS. Also, in Airport Utility 6.1, you no longer need to checkmark the little box to extend a network on a main basestation or TC. That is now done automatically, although none of the documentation that you download reflects that fact yet.