I've been using Airport Express wireless-g for years to stream music to my stereos. And they work great once you get them working, but with the wireless-g models, I have always had problems setting them up on a new network after they have already been setup on another network. I use it as a streaming device, so it is set up as a device on my network, and not as my router. The problem with dropouts when streaming music over an Airport Express g can be resolved by changing the network settings on the wireless router.
First of all, the Airport Utility never seems able to find an Airport Express that does not have factory settings and is not set to communicate with the existing wireless network. Sometimes holding down the reset button on the AE until the light blinks rapidly while it is plugged in works. In other cases, I have had to hold it down before plugging it in and then plug it in to get it to work. I have often had to repeat these steps multiple times before I can get the Airport Utility to recognize it. It takes persistence, but eventually the Airport Utility will recognize it.
Once it is recognized, the setup is straight-forward. However, every time I set one up, I seem to forget about the dropout issues. I've found that dropouts occur when the network router wireless settings allow for both TKIP and AES security protocols (on a WPA security setting). I've found that by changing my router wireless settings to either TKIP or AES, but not allowing the use of both, the dropouts no longer occur.
Hope this works for people, as I love the AE's once they work. Just got a new wireless-n AE, and it seems some of the issues may have been resolved.
[crarko adds: I remember seeing some of these issues with the older AirPort Express as described here. I thought they were fixed with firmware updates, but I'm not absolutely sure. This sounds worth trying if you still have the dropout problem.]
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