Let's set up the AirPort Express first, then you will know how to set up the Time Capsule.
Move the Express close to the Extreme for the setup, and use a short, spare Ethernet cable for the setup. Connect the cable from one of the LAN <--> ports on the back of the AirPort Extreme to the WAN "O" port on the back of the AirPort Express
Power up the AirPort Express and let it run a minute or two
Hold in the reset button on the back of the Express for 7-8 seconds, then release and allow a full minute for the Express to restart to a slow, blinking amber light status
Click the WiFi menu at the top of the Mac's screen and look for a listing of New AirPort Base Station. Just below that listing, click directly on AirPort Express.
When you click on AirPort Express, that will start up the setup "wizard". It will take few seconds for the wizard to analyze things, then display a screen that looks similar to the illustration below, except that you will see your devices pictured and the name of your wireless network displayed
Type in a short, simple name that you want to call the AirPort Express
Click Next
Watch the next screen carefully to see that the AirPort Express is being set up to extend using Ethernet. This indicates that the wizard has picked up the wired Ethernet cable connection between the AirPort Extreme and AirPort Express, so the correct settings for the Express will be applied automatically and correctly.
When you see the message of Setup Complete appear, click Done.....and you are done. Now you know that the Express is set up correctly.
Now power off the AirPort Express and move it to the location where it will be needed and connect the Ethernet cable to the same WAN "O" port on the Express. Power up the Express. If the Ethernet switch is working correctly and the longer Ethernet cabling is working correctly, so too will the Express be working correctly.
Set up the Time Capsule exactly the same way as the Express using the same general steps that I provided above.....except give the Time Capsule a different short simple name.