I set up time capsule and now can't connect wirelessly

I got home with my new Apple and Time Capsule last Friday and was unable to connect to the net. I called Cox cable and they came out and got me up and running. The yellow light on the Tine Capsule kept blinking but I was able to connect and thought it was just a glitch.
Today I added a printer and, after a few headaches, got it up and running. Then I tried to set up the automatic backup process and thought I was OK. Now, however I can't connect wirelessly at all. I keep getting the message "None of your preferred networks are available." I have a neighbor with a wireless network and it sees that, so something is going on. I also am able to connect directly to my modem and get connected. The yellow light is still blinking!
I have tried re-starting the computer, turning off both the modem and Time Capsule, but nothing works. I am beginning to think I have a defective Time Capsule but the store I got it from is two hours away, so if anyone can offer a suggestion, I would be most grateful.

I just went through the same deal. I'm not exactly sure how I did it, but I eventually got it to work, and even have Back to My Mac in play. For the next ten minutes, anyway.
So here's the deal. These are some of the things I did that you might try.
First, there is a big issue regarding how you presently connect to the internet - DSL modem? Cable modem? A dixie cup and a piece of thread? Time Capsule is both a router and a wireless base station, so whatver you're using now might be performing router duty as well, and screwing things up. I replaced my AT&T 2Wire device (modem, router, and wireless base station in one box) with a DSL modem. Oh, and when I was prompted, I assigned the public IP address for my broadband connection (the one that begins with 70.xxx.xxx.xxx) to the TIme Capsule, instead of having Time Capsule get one of those 192.xxx.x.xxx or 10.x.x.x IP addresses from DHCP.
The modem has to operate in "bridge mode." Whatever the heck that means.
Also, in configuring time capsule, I initially used an ethernet cable attached to a computer (in this case, my MacBook Pro). It seemed easier to get it going that way, and once it had managed to connect, it made it easier to get on just using the wireless connection.
When you're prompted, you want to create a new network, although it might be helpful to take it one step at a time and keep your present network up and running and let Time Capsule join that deploying - initially - just the wireless backup capability.
Oh, and regarding restarting all the hardware, I did that too. But with Time Capsule, if you're not already doing it, you should not just restart the device, but do a reset. On the back of the device if you look carefully toward the right you will see a little pinhole. Get a paper clip and depress the little button inside that little pinhole until the front light begins to blink rapidly. That resets Time Capsule and was the only way I could get the thing to bite at the beginning.
So much for Mac's just working. Although once they do . . . .

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