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I want to set up a media server for streaming of my music library via AirPlay and AirPort express to my hifi. Is there any way to use time capsule for this or do I need to get (yet) another device?

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I don't use Time Capsule, so I need to ask something: Do Time Capsules show up when you're browsing devices connected to your LAN? –  timothymh Feb 4 '12 at 21:49
What device will consume the song data and act as the controller for pushing media to a given AirPlay / AirPort destination? –  bmike May 25 '12 at 21:24
You need to have something plugged into your stereo... You could have all the music in a shared iTunes library and plug an iPod into the stereo and stream through the iPod, or you could have a Raspberry Pi (or any other computer) plugged into your stereo running XBMC (Raspbmc) and either stream music to it using Airplay, or use it to browse your TimeCapsule over the network. Where do you want to store your music? Are you wanting to store it on your computer, or on the TimeCapsule? –  daviewales Dec 4 '12 at 7:16

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My best advice would be to invest in a NAS. Their software is much better for doing what you need. Synology is my favorite as their software is very intuitive and Mac like. A NAS also lets you do more with it like backup files, use it as a web server, host a blog, download files directly to it and stream both music and videos. If you check out our forum, @ mkvxstream.blogspot.com we have links posted to live demos of both Qnap and Synology. I know it's another piece of hardware but a NAS is much more versatile than Time Capsule.

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I don't think the TimeCapsule/NAS is the issue. He already has a TimeCapsule, so he may as well use it. The issue is how to get the music from the TimeCapsule to the stereo. –  daviewales Dec 4 '12 at 7:10

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