Airport Extreme and Airport Express conflict and failure

Question

I spent 2.5 hours on the phone with Apple and still could not get my Airport Extreme and Airport Express to function. My Apple TV failed as well:
* Connected AEX through Airport Utility to internet. Airport Utility replaced my old configuration on my LinkSystem router. Green light.
* Checked Apple TV. No connection available. Unplugged cable modem, waited 1 minute and tried again. Apple TV connected. No problem.
* Flashing amber light on Airport Express for Airtunes. Does not show up in wireless device list. I call Apple.
* Reset Express. Still no signal. Connect via Ethernet cable. Reconfigure. Green Light. Music works.
* Check internet connection, in order. Apple TV fails. No connection to server.
* Apple TV reset. No connection. No wireless network found.
* Reset Airport Express. Reconfigure channel specifications. No connection with ATV or Airport Express.
* Disconnect Airport Express. Reconfigure. With ATV disconnected I get Airport Express back. Green light but this time no music. Remote speakers appear on itunes, but no music is transmitted.
* Did a total wireless reset on Extreme, and now both Express and ATV are not working.
Frustrated and dissapointed I disconnected everything put back my 5 year old Linksys router and within 15 seconds both ATV and Airport Express worked flawlessly.
How can this happen? What is wrong with this device? It is my second one in a week. The first one made no wireless connection to my Mac at all.
After sulking for hours I tried again, this time leaving the Express out of the equation and reconfiguring the ATV to take over airtunes. After a reset it did fine. Now I have a pure n signal running at 5hz. ATV works again. So does internet.
Any suggestions? Is there something I did not try?
I tried the Firewall trick, the accept all incoming connections trick, the disabling of the iv6 trick, the join a wireless connection trick, and everything else Apple Care could think of.

Answer 1

Maybe I was not clear enough on my post and configurations,
I had a Linksys before I purchased the airport extreme. My airport express joined the Linksys network for the purpose of airtunes. This worked flawlessly from day one.
Airport Extreme asked in the utility to take over an existing network or replace a router. If you chose this option it adopts all passwords, wpa/2 configurations for security and such.
I chose this option thinking that since it is an apple product it would take over everything and work. My airport express had origianlly been set to join my old Linksys network. Since the airport extreme took over this configuration it should work.
Apple stated many times that there seemed to be a conflict and kept asking me about the placement of my airport extreme.
My Linksys was never part of a bridge or a network within a network. It was removed before the Extreme was ever turned on.
After all the problems and hours of trying with Apple, i find it funny that all I had to do to restore eveything was plug my old Linksys back in and conect all the cables, and bam....it worked.
So what is wrong with the airport extreme, or is there something wrong with itunes 8 and its interface with the express? For whatever reason the extreme cannot make the express and my ATV work at the same time.