HELP. I have 2 TC and don't know what to do

I have a First Generation Time Capsule and just upgraded to a new 4th generation TC. I'm wondering if I can use my old 1st generation TC as my back up for time machine and my new TC would be my wiif/inernet for my iTunes and a media server for my Apple TV. And if I can how does one set this up?

A TC makes a lousy media server..
It has no form of backup to protect files you place there.. you will need to run the files back to a computer... so you may as well just use the computer as the media centre. And the tc for backups.. as it was designed for.
Then your media will get backed up by time machine and you probably need the new one for the extra disk space.
If you want to run both.. just bridge on or the other.. ie nominate one as the router.. I gather your current series 1 is doing that.. in the second one, go to the internet tab and select connection sharing off..bridged.. that will make the second TC connect as a slave to the first.
This is assuming you connect them by ethernet which is, IMHO the only right way.. you can link the by wireless.. and get half speed of your wireless if you really like.

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