An error occurred while updating the firmware 54 for time capsule? Help...

I think we are unsure what your 54 means.. that is error 54??

Most errors to do with updating firmware are caused by network layout.. or it can be things like ISP using a transparent proxy which is a lot more difficult to overcome.

Try moving the TC to ethernet connection only.. to main router and to the computer.. firmware updates over ethernet are usually much more reliable than wireless.

If that is already your situation or impossible to achieve.. or the problem is actually proxy server.. we can give details for manual update.

I would need to know the exact model of TC if you want explicit instructions.