Airport Express not working with wireless router

I just bought Airport Express to play music on my stereo. My PC running XP is connected to my wireless router (TeleWell TW-EA510v3) with ethernet cable and airport express wirelessly. Problem is that Airport Utility (and iTunes) can't find AE if it's not connected to router with ethernet cable.
I can connect to AE from Aiport Utility by "configure other" option so it's connected to my wireless network correctly.
Is this kind of set up even possible (pc wired to router and AE wireless)? I have tried tried WEP, WPA/WPA2 and no encryption on my wireless network and AE connects ok every time but Airport Utility still can't find it. I even tried to make a WDS network but AE was not compatible with my router. Now I can't come up with anything else to try.
Is there anything else to do? Should I buy WLAN adabter to my PC and would AE work then?
Why can't Apple make Airport Utility to recognise AE with given IP like with "configure other" option? Should not be too hard to program?!
Message was edited by: -MTL-

Follow the isntruction lisetd below...they work.
Actually, the ae is a slick device, once you get it to work.
Make sure that one (or both) checkboxes in Airport Utility > Airport Express tab
(middle of page) are not checked...if one or both are checked, they limit (hide) wireless connectivity options (e.g., WEP-64) to choose from.
P.S. You must have patience: it may take a couple of minutes to establish the connection and turn the led to solid green. So, give it a chance.
===============================================================================
OMG!!! You are da man!!!
I have this streaming perfectly now!! Here is what I did for others to see and use (it does work perfectly)
Step 1) Clear/Reset the Airport Express
Step 2) Connect the Airport Express directly to the Router/Modem via Ethernet to set up Wireless
Step 3) Do it via the Manual Set-up Effort Listed Below following:
AirPort > Base Station
o Base Station Name: <rename or leave default>
o Base Station Password: <enter desired password>
o Verify Password: <re-enter desired password>
o Remember this password in my keychain: (optional)
o Set time automatically: (unchecked)
AirPort > Wireless
o Wireless Mode: Join a wireless network
o Network Name: <existing Linksys wireless network>
o Wireless Security: <select the encryption type of the existing wireless network> I have 64bit WEP
(Same as 40bit on the drop down menu)
o Wireless Password: <enter the existing wireless network password>
o Verify Password: <re-enter the existing wireless network password>
Music
o Enable AirTunes (checked)
o iTunes Speaker Name: <enter desired speaker name>
o iTunes Speaker Password: (optional)
o Verify Password: (optional)
o Click Update to write the new settings to the AX
In iTunes:
iTunes > Preferences... > Advanced > General
o Look for remote speakers connected with AirTunes (checked)
Once it congratulates you, unplug the ethernet cable
Verify in Aitport Utility that it still recognizes (if not, repeat the above). Note this may take a few minutes, so be patient.
Now place the airport express with your stereo (or whatever) and again be patient as it tries to find the network
(mine took 4 minutes) then it turns green and you are off listening to music on your stereo downstairs in another room.
Frustrating when it does not work at first, but keep trying and it will work!!
Thanks everyone for your help!!
===============================================================================

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