Extending Airport Extreme network with Airport Express using WDS

I have been having some trouble using WDS between an Airport Extreme and Express, with the Extreme acting as the internet router in the network.
Both devices have been updated with the lastest firmware.
I am using Airport Utility 5.5.1
*Airport Extreme Configuration*
*Wireless Tab*
Wireless Mode: Participate in a WDS network
Allow Network to be extended: Checked
Radio Mode: Auto
Security: WPA/WPA2 Personal
Channel Selection: Manual (Same as my Express)
*WDS Tab*
WDS Mode: WDS Main
Allow Wireless Clients: Checked
WDS Remotes: (MAC of my Airport Express)
*Airport Express Configuration*
*Wireless Tab*
Wireless Mode: Participate in a WDS network
Channel: (Same as my Extreme)
Network Name: (my network name)
Wireless Security: WPA/WPA2 Personal
Allow this network to be extended: unchecked
Radio Mode: 802.11n (802.11 b/g compatible)
*WDS Tab*
WDS Mode: WDS Remote
Allow Wireless Clients: checked
WDS Main: MAC of my Airport Extreme
I think that covers the pertinent stuff. If there's anything else that might be useful, please just say so.
So, the Extreme is green-lit, working fine. Wireless clients can connect to it just fine. On the Wireless Clients page the MAC of my Express is showing up, with a type of WDS listed. It does not, however, show up under the DHCP clients section.
The Express is yellow-lit. Sometimes after a setting change it goes green for a minute or so, then back to yellow, reporting a WDS Error ("the AirPort Wireless device is set up as part of a WDS network, but no other AirPort wireless devices were found").
The Airport Express is ending up with an ip address of 169.254.49.198 (an automatic private). It seems it's not getting an ip from the Extreme's DHCP.
Do I have some sort of authentication issue here? Honestly I'm totally baffled.
Any help with this would be greatly appreciated.
Would the routers' logs be of any help?
Thanks
Message was edited by: Xaniel

Wait, just did a bit more reading. Am I correct in assuming now that the "Extend a network" option will function as a wireless repeater, with no ethernet connection to the main router required
Yes. This will provide much better wireless performance...and...its much easier to configure.
On your AirPort Extreme, open AirPort Utility - click Manual Setup
Click the Wireless tab below the row of icons
Wireless Mode = Create a wireless network
Make sure there is a check mark next to "Allow this network to be extended"
Update to save settings
On the AirPort Express, open AirPort Utility - click Manual Setup
Click the Wireless tab
Wireless Mode = Extend a wireless network (hold down the option key when you click on the selection box if you do not see this setting)
Wireless Network Name = Click on the selection box and name of your AirPort Extreme network should appear
Check mark next to Allow wireless clients
Wireless Security = Exact same setting as the AirPort Extreme network
Wireless Password = Same password as the AirPort Extreme network
Confirm Password
Update to save changes
A good starting location for the Express is a point that is about 1/2 to 2/3 the distance from your AirPort Extreme to the area that needs more coverage.
The ethernet port on the Express is also enabled, so you can connect an ethernet device if needed. Post back to let us know how things are working.

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