AE: green light, wireless n, net is slow and drops

I bought an Airport Express for my girlfriend. She has a 10.4 Core 2 Duo Macbook with N enabler installed. I think the AE is running the latest firmware (7.4.1).
The internet is terribly slow and cuts in and out. The light is always green. I've tried the usual fixes (hard reset, channel, turned off N and tried g, etc). I have yet to try it with another computer but I have a mini I can test it with. Internet is fast via ethernet.
Suggestions? Anyone else experiencing this problem? I don't know what the heck else to do.

I gave this a shot as part of ruling out the modem. The modem connected to the computer via ethernet is very fast. In fact, the modem was usually switched off overnight (but not the AE).
An old wireless g airport express was fast and never had any issues. Unfortunately it was broken.

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