What kind of external hard drive are you using? Is it a Gigabit Ethernet NAS? What specific make/model is it? What format is it? Does it work connected directly to the computer via USB? Does it work connected directly to the Time Capsule via USB? If it's a NAS, why not connect it to the Time Capsule with an Ethernet cord?
Belkin is a good brand in my experience. The hub should work with a Time Capsule and a USB HDD formatted as HFS+, though it could be possible that you have a defective one.