Can I use a 3rd party router as a wifi extender for a time capsule

A universal wireless repeater can extend wireless.. but we do not recommend them. They are a get out of a hard place short term solution but they simply do not work well or reliably.

When you say 3rd party you mean using some other brand than apple.. or do you mean another firmware like dd-wrt.. the later certainly works and you can do several different repeater modes.. if you like playing.. however.. reliable operation is not a result I would expect.

Any router will work as a WAP.. as long as you connect the two routers by ethernet.. some have a built in WAP mode but all routers (with a couple of exceptions) will work fine in WAN bypass.. by simple tricking the IP setup to exist in the same subnet with the main router.

It is much better to buy a second hand airport extreme for example.. a Gen4 or Gen5 and use that for proper apple wireless extend.. it is simple and almost reliable.. well as near as possible this side of heaven.

If I get a 2nd airport how do I link them together

Ideally, you would connect the extender to the Time Capsule with a permanent, wired Ethernet cable connection between the two devices. There is no signal loss through the Ethernet cable, so the extending AirPort performs at maximum speeds.

It possible to have the extending AirPort connect to the Time Capsule wirelessly......IF.....the extending AirPort is located at a point where it can receive a strong wireless signal from the Time Capsule. But, a wireless connection like this always results in a compromise in performance, so you should expect to lose about half of the potential speed capability on the network when you use this method.

In other words, when you extend using a wireless connection between the Time Capsule and another AirPort, your network will have greater range, but you will have a slower network.

If you are asking for "how to" setup help, in order to provide the correct instructions, we would need to know.......

1) Which method.....wired or wireless......that you plan to use

2) What device......a Mac computer or an iPhone/iPad that you plan to use to configure the extending device. If you plan to use a Mac, we would need to know what operating system that it is using. If you are not sure about that, click on the Apple icon in the upper left corner of the screen, then click About This Mac and post back with the OS X Version number that see there.