I got one of the new Airport Express (AE) boxes yesterday and set it up without problems to extend the existing wireless network. Using Airplay to hook up with my stereo also worked without any issues.

BUT, when streaming from my Macbook Air (newest type, mid-2012), the sound is breaking up incessantly if the computer is located just next to the AE. If I move away a couple of metres, everything is fine. And when I connected the Air to the ethernet port on the AE, everything went bananas. The LED light on the AE started flashing and it lost its internet connection. I ended up having to reset the AE with factory settings (unplugging and reconnecting while pressing the reset button). This is a real bummer, because I was hoping to use the AE as an ethernet host for my Air. Now I have to keep it away from the AE when I'm streaming music.

My immediate guess is that the Air doesn't like when it's both getting data from the AE and streaming sound to the AE at the same time. When I move away, it probably gets internet from the original wireless router, while it's obviously still streaming to the AE. Any thoughts on what might be wrong? Thanks in advance for helping me out.