How do I save data as well as backups on one Time Capsule

It sounds like you want to copy the iTunes Library and other video files over to the Time Capsule drive.....and then delete the files from your Mac to save space on the Mac.

Is that correct? Are you OK with having only one copy of the iTunes Library and video files on the Time Capsule.......and no backup at all for those files?

A much safer plan, security wise, and also performance wise, would be to move the files over to a USB drive connected directly to your Mac. Then, Time Machine can back up both your Mac and the external USB drive to the Time Capsule. So, you have a basic backup plan of "original" files on one drive and "backups" on another drive.

Performance wise, access to the iTunes Library on the Time Capsule is going to be slow, and the library will tend to get "lost" on a regular basis, so you wind up having to manually point iTunes at the library on the Time Capsule on a regular basis.

All in all, this is one of those times when the fact that you can do something......(store "original" files on the Time Capsule)......does not mean to imply that it would be a wise thing to do.

anyway Apple marketing suggests that the wireless connection to a Time Capsule should be "brilliant", so why would iTunes regularly get lost and access be slow??

Simply because the Time Capsule was designed to store Time Machine backups......not "active" or "working" libraries. You need a real media server for that....and the Time Capsule is not that product.

No one is stopping you from trying this if you want.....but having tried this myself a few times, I think you will find that it is a lot more trouble that it is worth and it creates more problems than it solves.

My main question however was if I could simply drag the files into the TC or whether I needed separate partitions(?) and reformatting, etc.?

The Time Capsule drive can be partitioned, but it is not recommended. Here are the basics:

Open up the Time Capsule.....(which voids the warranty on the product)

Pull the hard drive

Install the hard drive in a separate SATA to USB caddy

Connect the caddy directly to your Mac

Use Disk Utility to partition the drive

Reinstall the drive back in the Time Capsule

Hope that it will work

If you try to format the Time Capsule drive, that will erase everything else on the drive, so you really have no choice but to install everything right on the Time Capsule drive.

Here is how to move the iTunes Library over to the Time Capsule........Locate and organize your iTunes media files - Apple Support

But, before you do this, you might want to look over Apple's information sheet on the Time Capsule to verify that Apple does not mention what you want to do anywhere in the product information for the Time Capsule. There just might be a reason for that.

http://www.apple.com/airport-time-capsule/