Time Capsule connectivity questions

I'm not clear about your ethernet connection: what else are you connecting that ethernet cable to? something needs to be on the other end.

If your 2Wire is like mine it acts as a router and residential gateway for broadband. It has wifi and a few ethernet ports.

Probably the easiest way to get the TC going is to connect it via ethernet from its "internet-WAN" port to the ethernet port on the 2Wire. Then set the TC in what's called "bridge" mode. Use "create a wireless network" and you'll have to set a name and password, etc. You might try using a separate channel rather than automatic, YMMV. The connection will be ethernet, and again the setting is called "shared internet-bridging" or something like that.

I'd also suggest a trip over to ATT's uverse forum; those 2Wires are rather idiosyncratic and stuff that works will other routers is often a fail with them. There are lots of people with more experience with 2Wires and apple products who can help.