I select "Time Machine" from System Prefs.
Get the window with "Select Backup Disk..."
That opens another dialog box with nothing showing as an available drive for backup (since I'm trying to use my 3TB Time Capsule I don't have a firewire or usb HD connect to the iMac)
If I click the only active "button" under the window besides "Cancel" which is "Set Up TIme Capsule"
That then launches "Airport Utility" (Version 5.4.2 (542.23)
That has an overlaid dialog box stating "A newer version (5.6.1) of AIrport Utility is available.
"click update to launch Software Update and quit AirPort Utility" The 2 option buttons are "Cancel" and Update....
Clicking "update opens the usual Software Update app... it scans and then tells me there "Your software is up to date." Software update doesn't have any new software for your computer at this time. A "Quit" button is the only available option.
I know the Time Capsule is recognized by this iMac since I'm online using the WiFi of it... and it's shows up in the System Profiler that it's there and the AirPort Icon in the upper right corner of the Menu Bar shows full signal and that I'm indeed connected to the the wifi of the 3 TB Time Capsule
This IMac is running OSX 10.6.8 just like my 2009 MacBook Pro which is also using the same wift and backing up to the Time Machine since I bought it and installed it a few months ago