Hello and welcome.
-Which version of OS X/macOS on the iMac?
-You have a 2 TB AirPort Time Capsule 802.11ac (A1470), correct?
-How are the drives attached via USB to the Time Capsule formatted - GUID and Mac OS Extended (Journaled)?
-Did you enable File Sharing on the Time Capsule using AirPort Utility > your Time Capsule > Disks?
C
I have superblock copied the iMac onto a spare hdd and then erased the iMac and reinstalled the original os. Updated to Catalina 10.15.5 and used the migration facility to copy over all data to the new instal excluding the applications. When setting up the migration assistant it calculated the applications as being 1.6PB in size - crazy! So I guess there was a problem with either the new os not able to process correctly or that incompatible applications were causing erroneous results.
I have installed all the original applications- but only from the relevant websites or from the AppStore - hoping that the latest versions will be compatible with Catalina
Time machine is now functioning correctly with the original 2TB hdd.
I can only assume that Catalina is not able to accommodate incompatible applications