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Or does capping a chimney always remove the ability to use a fire ?

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Yes, you can, but definately consult an expert like ChrisF stated. I would start with a fireplace and chimney store. I once made a cap that covered the flat space on top of the chimney and then had a raised center with a roof and screen to keep out rain and birds.

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If you mean the moisture form rain, yes. More problematic is the condensed moisture from a gas fire –  HerrBag Feb 25 '13 at 16:26
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I'm pretty sure that you can get caps that allow you to still use a gas fire.

Consult an expert though.

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NO

The moisture is a result of lower flue temperatures allowing the water vapor in the exhaust gas to condense (dew point). A cap will reduce the flow, but does nothing to prevent condensation.

The only practical solution is to line the flue (with a metal liner) and remove the damper (if this was a wood burning fireplace, originally. The liner is sealed at the bottom with a fitting and an appropriate mortar. The liner is then attached to a cap for a end-to-end seal.

The water in question is acidic and will attack the mortar, potentially causing leaks and joint failure, over time

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