Start over again by powering up the Time Capsule for a minute or two, and then holding in the reset button on the back of the Time Capsule for 8-10 seconds and releasing. Allow a full minute for the Time Capsule to restart to a slow, blinking amber light.
Connect the Ethernet cable from a LAN <--> port on the Sky router to the WAN "circle of dots" port on the Time Capsule.
Click the WiFi icon at the top the Mac's screen and look for a listing of New AirPort Base Station
Just under that heading, click on Time Capsule
That will get the setup "wizard" running.
It will take a minute to analyze the network, then suggest the proper setup for the Time Capsule. Follow the prompts to name the Time Capsule network, name the Time Capsule device and establish a password for both the wireless network and base station device.
Click Next
The utility will set up everything for you automatically. When you see the message of Setup Complete, click Done, and you are done. There should now be a nice green light on the Time Capsule.
You may need to power down the Sky router and then power it up again so that it will recognize the Time Capsule on the network.
If you do not need another wireless network (the Time Capsule wireless will likely easily outperform the Sky wireless) and you want to turn off the wireless on the Time Capsule, post back for more instructions.