High current linear discharges confined by their own magnetic field are subject to magneto-hydrodynamic instabilities which perturb a straight plasma column. An example is the m=0 mode, which is characterised by the development of necks contracting rapidly towards the axis with the ion sound speed. Discharges through capillaries were assumed to be stable hitherto, but by cutting capillaries lengthwise after a few shots hot spot traces clearly imprinted on the inner wall of the capillary are observed. They are interpreted as marks of an m=0 instability, and this interpretation is substantiated by a series of time-gated pinhole images, which show that the hot plasma region is crearly detached from the wall at the second current maximum and concentrated on the axis thus making the development of the instability possible. The instability occurs only with a specific sample of polyacetal as wall material, and its axial wavelength increases with the length of the capillary. By modulating respectively the inner wall of the capillary the wavelength can be imposed within limits. This is exploited for a soft X-ray laser scheme based on charge exchange pumping of bare carbon ions of hot plasma streaming from the necks and colliding with cold plasma outside the neck regions. Exponential growth of the Balmer-a line of CVI at 18.22 nm is realised.