Expander passes DHCP info but no internet

Question

I have a SMC 7908VOWBR router and 2 WRE54G range expanders (a v.1 and a v.3). The v.1 has been working fine with the router but has a different SSID than the router. The new v.3 must have the same SSID as the router so that's what I did. I use WEP
The router shows both expanders as connected through WDS. Both the V.1 and the v.3 show two blue connection lights but when I connect any of the laptops through the V.3, I get an ip address and a gateway (router IP) from the router but that's it.
After the ip address has been obtained, I can ping as far as the v.3 (10.0.0.12) but not further. When I connect straight to the router (10.0.0.3) I can't ping the V.3 and vice versa. There must be a connection because I get an ip address through the V.3
The V.1 does everything fine and the only difference is a different SSID.
Any ideas? It frustrates the hell out of me.

Answer 1

Thanks for the advice but I flashed the firmware (even before starting the thread) without result. I do have an update on my first message. It is different than what I initially thought.
When I plug the expander in the power socket, everything works fine for about 5 minutes (DHCP, ping to router, internet and all)
After this time, the connection between the router and the expander stops. A ping to the router fails and DHCP doesn't work anymore. The expander still shows 2 blue lights and the router show the expander as connected through WDS but nothing seems to work.
Basically, the connection between router and expander lasts for about 5 minutes.