WASHINGTON - Olie Kolzig left the Washington Capitals on less-than-ideal terms after nearly two decades as a popular and productive goalie. Clearly, that rift is a thing of the past.

The man known as "Olie the Goalie" returned to the Capitals on Thursday as their associate goaltender coach. The team also announced that Dave Prior will come back in his past old role of director of goaltending and NHL goaltender coach.

"Time heals all wounds," Kolzig said on a conference call with reporters. "The more I was removed from a few years ago and being retired and getting a better perspective on things ... you realize it's a business and things were handled in a business fashion."

Kolzig played with the Capitals from 1989-2008 and holds most team goalie records, including 711 games played, 301 wins and 35 shutouts. He was a two-time NHL all-star while with the Capitals and won the 2000 Vezina Trophy for the league's top goalie.

But at the trade deadline during the 2007-08 season, the Capitals acquired Cristobal Huet, who became the team's No. 1 goalie, supplanting Kolzig during the stretch run that put Washington into the playoffs. Kolzig wasn't pleased by the demotion and he left during the following off-season.

"You move on," Kolzig said, adding that he spent time with team owner Ted Leonsis and general manager George McPhee at a convention for Capitals fans last year.

"There's no ill will toward each other."

He was a teammate of some current Capitals, including captain Alex Ovechkin, and said there will be a bit of an adjustment to his new job.

"Once I get in there, I'll have to remind myself I'm a coach now and not a player, and maybe back off some of the things I might have said as a player," Kolzig said.

While away, he kept tabs on his former club.

And Kolzig said he noticed some things while watching the Capitals make earlier-than-anticipated exits from the playoffs the past two years after finishing each regular season with the best record in the Eastern Conference.

"They have too much talent to not go further than they have," Kolzig said.

In 2009-10, when Washington won the Presidents' Trophy then lost in the first round to the eighth-seeded Montreal Canadiens, Kolzig said: "I think the big thing was they didn't have the killer instinct."

And this season, Kolzig explained, "I think they need to find a good balance of offence and defence."

He referred to Prior as "sort of a father-figure for me."

Prior was Washington's goaltending coach from the 1996-97 season to 2008-09.

He comes back in place of Arturs Irbe, whose departure was announced a week ago after two seasons coaching the Capitals' goalies.

McPhee said Prior "did a real good job for us there before" and that Kolzig was the "first one who came to mind" when it came to having someone else on staff.

As of now, the Capitals have three young goalies who potentially could be vying for playing time: Michal Neuvirth, Semyon Varlamov and Braden Holtby.

"My biggest advice would be, 'Play your game,'" Kolzig said.