Trouble extending wireless network using 2 Airport Expresses

I used to have one Airport Express extending my Time Capsule, and had a stable network. Since adding a second Express I have intermittent prroblems - sometimes termporarily "losing" the network from my devices (Mac Mini, iPhones, iPads) at various parts of the apartment. I absolutely can no longer use Time Machine to back up my Mac Mini from the second Express to the TC (a full backup estimated 5 days and keeps timing out or failing).
There's quite a bit of degradation in the signal from the front of the apartment (the TC) to the back (the 2nd Express). For example, at the TC attached to the cable modem, I get about 20-25 Mbps download (very happy) and in the back where my computers now are, I get about 2 Mbps (unliveable - really).
I need it to be stable, but sure hope I can get better performance. Can anyone help me troubleshoot or tune up the performance?
Are these Expresses phasing each other in and out?
My configuration:
Living room: Time Capsule (1st generation) running 802.11n 2.4GHz only network. Firmware version 7.6.1
Next in line, about 35 feet away, Airport Express, FW Version 7.6.1
Last in chain, another 35 feet away, Airport Express, FW Verson 7.6.1
I live in a 1,600 sq ft apartment, not a huge house. There are some walls, but I try to keep them pretty exposed.
I set it up using Apple's Airport Utility v 6.1 (610.31), from Mac Mini using Lion 10.7.4
Default settings, no tricks, DHCP. Just turned off Airplay to see if that would help.
Airport Utility says (today) I have "excellent" connections between the devices.
Any help would be grealy appreciated.
Jim

Next in line, about 35 feet away, Airport Express, FW Version 7.6.1
Last in chain, another 35 feet away, Airport Express, FW Verson 7.6.1
The "remote" devices in Apple's "Extend a wireless network" setup all connect directly to the main router...in this case, it would be the Time Capsule.
The setup works like the hub and spokes of a wheel. The Time Capsule would be the hub and each AirPort Express resides at the end of a spoke. A device at the end of a spoke cannot communicate with another device at the end of another spoke. It communicates directly to the Time Capsule.
Remember that an "extending" device can only extend the bandwidth (speed) of the signal that it receives. It can help provide more signal strength.....but it cannot make the signal that it receives go faster. Placement is critical. 
If you had only one Express, a good location might be approximately half the distance from the Time Capsule to the general area that needs more wireless coverage.
Chances are, the second Express is receiving such a weak (and slow) signal, that it cannot do anything to help. It is like a copy machine trying to copy a very poor image. You may well be better off eliminating the most distant Express and trying things that way.
Things get more complicated when you add in obstructions like walls. Even a typical interior sheetrock wall will absorb 15-20% of the signal or more, so after a few walls the signal has already lost approximately half of the strength...and speed.

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