One thing to keep in mind is that if your goal is to use your repurposed Time Capsule (TC) as a NAS, especially for Windows devices, is that it only support SMB v1.0 for file sharing. Windows 10 disables v1.0 by default for security reasons and you would have to re-enable it to work successfully.
Since the TC's internal drive can be shared out with SMB, it doesn't matter if it is formatted as FAT32 and it was designed to work best formatted in HFS+.
The other thing to keep in mind is that the TC was not designed to be anything other than a destination for Time Machine backups. Its limited CPU makes for a poor file server, let alone a full-featured NAS ... which it can never be.
If you still want to repurpose your TC, you really don't need to do any reformatting of the internal drive; other than fully erasing it, you should be good to go.
FWIW, I use my last TC as a simple file server pretty much since I got my Synology NAS about three years ago. When the TC finally reaches EOL, I have a Raspberry Pi w/attached USB drive to replace it.