How To Set Up Airport Express To Use With iPad2 For My Needs ?

On the advice of several people in a audio forum, I just purchase an Apple Airport Express. I will be using it with my new iPad 2. What I need to accomplish is using my iPad2 to stream subscription based music from the internet to the Airport Express, and for the Airport Express to connect via toslink cable to the DAC in my audio system.
What I am not sure about is how to set up my Airport Express to accomplish this. I do have a wireless network in my home, but wish to keep the wireless connectivity between the Airport Express and the iPad2 separate from it.
I would greatly appreciate any assistance with this. Thanks.

Deggie, firstly, thank you for your attempt to help. I greatly appreciate it. I connected it via the ethernet cable to the router since when I reconfigured the Airport Express adding it to my existing wireless system, the iPad could not connect to anything until I unplugged the Airport Express. I set it up for an ethernet connection to my router based on that experience.
Either the Ipad does not seem able to send anything to the Airport Express, or the AEX is not passing anything on. I also tried streaming a song stored on the iPad 2 to the AEX with no result, so it is not an issue with the subscription channel.
I don't own a miniplug cable of any sort for further testing, but the toslink cable is brand new, and was literally taken out of its package and plugged in, so I feel it extremely unlikely it is the issue. I've also tested it in three inputs on the DAC, so it is definitely not an issue with it.
I have a question though. You said "when you start your subscription and go to Airplay, does the iPad see the AEX?" You may be on to something there. How do I "go to Airplay" I thought it was just automatic?  Also, how do I "select it"? This may be the problem.

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