How do I transfer time capsul data to external hard drive to free up space?

The fastest method is straight copy and paste..

Plug a suitable hard disk into your computer.. format it Mac OS extended journaled (if not already).

Select the folders/files you want to move.. copy and paste them to the external drive..

Double check that the files are copied because the next step will delete the files forever.. there is no trash on the TC.

Delete the files on the TC.

You can also do a full archive of the TC disk to a USB plugged into it by USB.. it must be formatted Mac OS Extended Journaled. It must be big enough to hold all data on the TC disk.. best idea is to buy the same size or bigger.. so if you use 2TB TC buy a 2TB or bigger external drive.

In airport utility select archive.

That will copy everything on the TC disk to the USB drive.. you could then Erase the disk of the TC.. this is super fast if you choose quick erase.. just a few minutes. But the archive will take many hours.. say for 2TB about 12-24hours.. and you cannot use the disk in the TC during that time.

Hi.. you need to get a bit more energetic.. click things.. jump over things.. I am still discovering stuff apple has not even documented on the airport utility.

To get to the screen I showed you click the icon of the TC.

Then click edit.

From edit you will get the full manual setup.

OR you can hold option key and double click the TC icon.. and you will get straight there.

Get clicky.. use your mouse.. (or trackpad or whatever you use).. everything is there.. but it is in layers..

Apple is determined to show nothing more than minimal unhelpful screens until you need more.