running a wireless connection and time capsule connection simultaneously

The Time Capsule is also an Airport Extreme bas station. You can hook your modem directly into the WAN port of the Time Capsule and use it as a wireless router. Or you can tell the Time Capsule to join a wireless network. Either way, the TC can be used as a internet access point that will also give you the Time Machine access you need for the backups with one wireless connection.

 

Or you can connect the Time Capsule to an existing network to extend its range and provide backup service. That's what we have in my house, and I am quite pleased with the result.