How can I format Time Capsule? How can I format the Time Capsule hard disk?
Launch the AirPort Utility.
Select the Time Capsule whose disk you want to erase.
Hit the "Manual Setup" button.
Click the "Disks" icon button.
Click the "Disks" tab.
Select the disk (not a subvolume, the disk itself).
Click "Erase...".
Follow the dialogs from there.