I hope you are aware that the TC can act as a router. The downside is you need to run that annoying Apple software to configure it and can only be configured from a computer with wireless. Configuring the TC as a wireless client is even more annoying. If you can I would return the 3700 because you can always buy it again later if you find the TC is no good as a router, but it is essentially an Airport Extreme Base Station and is also simultaneous dual band 802.11n
Just plug the TC into the broadband modem and run the Apple software on the CD. It will install the Airport Utility on your Macbook. Run the Airport Utility and it will scan for the TC. Follow the wizard and configure the Hard Drive. You may also want to enable SMB sharing for Windows users if it is not enabled already.
For wireless settings, enable WPA2-PSK AES (not TKIP).
If you want to keep the 3700, plug the 3700 into the modem instead and setup the 3700 from the web interface or using the 3700 CD. Use WPA2-PSK AES as before and enable both 2.4ghz and 5ghz radios and give them different networks names.
Then just plug the TC into the AC power socket and do not connect any LAN cables. Run the Airport utility on your Macbook and configure the TC to JOIN your 3700's network. If the TC is close to the 3700, connect to the 5Ghz network because 5Ghz can have higher bandwidth but has limited range.
P.S.
If your printer is USB only and not a network or wireless printer, plug it into the TC and configure the TC to enable print sharing. Even if you decide to use the 3700 as your primary gateway, plug USB print into the TC. The TC has Apple Bonjour for easy network printer setup on your iMac and MBP - ie you do not need to know the IP address of the printer. Just add a network printer in OSX under System Preferences and it should detect the printer if you configured the TC correctly. For Windows PCs wanting to print, install Apple Bonjour for Windows first and then approriate drivers.
http://support.apple.com/kb/dl999
Download is on right of page.
If your printer is a network printer is should have the Apple Bonjour service (mDNS) so you do not need to attach it directly to the TC or Access Point using USB, just configure the printer's wireless settings from the printer itself. In OSX setup printer as before but for the driver, use the Postscript driver. In Windows (Vista or 7), no need to install bonjour for Windows, just drivers. For Windows XP, install Bonjour and printer drivers first (assuming your printer has mDNS)
Also note that many TC have a poorly designed internal power supply and many fail within 18 months. You can always use an airport extreme base station with an external USB HDD as a time capsule but it will only work in gateway mode and not client mode i believe. The AXBS does not have the faulty power supply for some reason.
