Trying to set up 2 Airport Extremes to replace my old 802.11g pair.

Hello...
I am trying to set up my extended Airport Extreme network with new Extremes to replace my older 802.11g pair.
Here is the situation: I have Cable 'net access that comes into my studio. It is then wired to the "Studio Extreme" into the WAN port. Then there is an Ethernet wire from the Ethernet port to a hub, which is wired through the wall to hub 2, that goes apx 500ft via CAT6 to my house. Then there is another hub that wires all the Ethernet ports in the walls of the house. Out of one port is AirPort Extreme # 2.
The Problem:
My old AirportExtreme #2 works fine. The new one won't play nice.
The Studio Airport is set to: Create A Wireless Network with WPA2 Personal security. It is happy with a green light.
The New AirportExtreme 802.11n is set to: Extend a wireless network with WPA2 Personal Security. It says Connect using: Wireless network.
I have tried to set it up with the Ethernet cable going into the WAN port, and the Ethernet port. When it is in the WAN port, it says "nothing is in the WAN port". When it is in the Ethernet port, it says It can't find the network. I have tried unplugging everything and turning it back on, in reverse order etc. When I bring the New Extreme #2 to the studio, it plays nice, but I suspect it is working wirelessly with the Studio Extreme. (?). 
I have tried to set it to "Create a wireless network" as I have seen suggested in some forums. Still doesn't make it happy.
I also tried to let the software " replace the old Airport with the new Airport" . that didn't work either.
The Old Extreme 802.11g still works and is happy also. Its cable is plugged into the Ethernet port and it transmits throughout the house.
I am going nuts trying to get this to work! Why does the old one work and not  the new one?
HELP!!!!
Thank you!

You got ahead of things here (and chose the wrong settings), but we can correct things.
Reset the AirPort Extreme again, please.
Then open AirPort Utility, select the AirPort Extreme, and click Manual Setup.
Click the Base Station tab under the row if icons to name the AirPort Extreme, assign a device password and adjust Time Zone settings.
Now, click the Wireless tab next to the Base Station tab and adjust settings as follows:
Wireless Mode = Create a wireless network  (Extend is used only if you connect using wireless...and you are connecting using Ethernet)
Wireless Network = Same name as your "main" AirPort Extreme
Enter a check mark next to Allow this network to be extended
Radio Mode = Automatic
Radio Channel = Automatic
Wireless Security = Same setting as the "main" AirPort Extreme
Wireless Password = Same password as the "main" AirPort Extreme
Confirm Password
Click the Internet icon, then click the Internet Connection tab
Connect Using = Ethernet
Connection Sharing = Off (Bridge Mode)
Click Update and wait 25-30 seconds for a green light
Very Important......Power off the entire network and wait a minute or two
Power up the modem first and let it run a minute by itself
Power up the "main" AirPort Extreme the same way
Power up the "remote" AirPort Extreme the same way
Continue powering up devices one at a time until everything is powered up
The network should now be functioning correctly.

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