Hi folks, also just bought a time capsule to get the 'n' wireless standard. I own a squeezebox version 1 and also have problems connecting to the time capsule. It only seems to work without encryption. For the SB3 there apparently is a firmware update to fix the issue, but I haven't seen firmware updates for SB1 for quite a while. Are they still being developed? Any other suggestions to fix the problem?
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