Airport express as feed for iTunes and nothing else. (No internet)

I have an older airport express a & g no n. I want it to send iTunes to my stereo.
I just switched providers and now receive internet via a small modem connected to USB so I do not want a wireless network. Just ability to send from computer to stereo.
The airport on my MacBook is on (but grey)
Airport utility can only find the express when I reset to factory defaults.
During set up I gave it the Apple network default name.
After restart Airport utility can not find the express. Additionally the airport antenna signal on my computer goes grey.
(If I turn the antenna off then on it shows the alternate black grey lines for a few seconds.)
I have also tired a computer to computer network where a small computer icon shows up inside the gray antenna icon. None of these work.
How should I set up the express so it can be found when I have no internet connection?
How should I set up my MacBook networks?
I can not find any instructions on what seems like it should be the simplest of connections. Everything assumes an internet connection.
Airport Utility version 5.4.2
Mac OS 10.6 SL
MacBook 2GHz 4G RAM
Appreciate any suggestions
Thanks

bch311, Welcome to the discussion area!
You don't want the AirPort Express (AX) to act as an access point. In that mode, the AX would be connected to an Ethernet network. The AX would then create a wireless network to provide wireless access to that network.
Instead you want the AX to act as a wireless network adapter. This will only work if your current wireless router supports ProxySTA or Apple's WDS. Very, very few 3rd party devices support Apple's WDS.

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