I have an AirPort Extreme, which is pretty much the same as the TC less the hard drive. Here's how I used to have it set when I had an Actiontec router:
1) Disable wireless in the Actiontec
2) Connect the Ethernet cable from the Actiontec LAN into the TC WAN port
3) Set up the TC to "Distribute a range of IPs". This way it will still assign IP addresses but will work in conjunction with the Actiontec, which is still the DHCP server. I set mine to start the range at .200
4) Create your Wi-Fi network as desired.