OK, then I have some good news for you. You are doing a capstone project, as part of the project they require you to perform for 130 hours. This is part of your studies as a full time student, The technical term given to this is Work terms, practicums & service learning opportunities by NSCC. This document also explains that it can be part of a project, which is what you are doing. You do not need a Co-op work permit for your Capstone project.
Your program does have an optional Co-op program of 12 weeks which will be paid. This will be in between your first and second year. You will have to get a Co-op work permit if you are opting for this Co-op program. This has nothing to do with your capstone project.
As of now you are 100% legal, should you want to do the Co-op program then do get the Co-op permit well ahead of time. Ideally one would assume that your college would know a few basic things such as this, but what can you do.
This PDF from NSCC should clarify your doubts.
https://www.nscc.ca/docs/learning-programs/work-experience/hire-a-student-brochure.pdf