I am experiencing the same problem with my sander, the capacitor is cracked and leaking, obviously bad.
The biggest issue is finding the right size to fit in that small area, and I haven't had any luck yet.
However, I found that Delta does sell a replacement capacitor for their model SA150 disc/belt sander which also has a 1/4hp motor - probably the exact same motor. The photo looks exactly the same as mine, so hopefully the dimensions are the same as well.
The capacitor for the SA150 is Delta p/n 1340645, I'm ordering one today for $20.56 at www.toolpartsdirect.com, but it should be available from anybody who sells Delta parts. Here's a few options
I'll let you know whether or not this is a good fix, if so it should help a lot of people, as I've seen this problem quite a few places online while googling for a solution.