Here's what ended up working, via: http://discussions.apple.com/thread.jspa?threadID=2725432&tstart=0
The following are the basic steps to configure a "dynamic" WDS with the 802.11n AirPort Express Base Station (AXn) being extended by the 802.11n AirPort Extreme Base Station (AEBSn). Please compare them to what you attempted to see if anything was missed.
One thing to note is that the AXn is not capable of providing simultaneous dual-band operation like the AEBSn. That said, you will only be able to extend the 2.4 OR the 5 GHz radio of the AXn. Since the lower frequency band travels longer distances, I would suggest extending it.
o If practical, place the base stations in near proximity to each other during the setup phase. Once done, move them to their desired locations.
o Open AirPort Utility and select the AXn.
o Choose Manual Setup from the Base Station menu. Enter the base station password if necessary.
o Click AirPort in the toolbar, and then, click Wireless.
o Choose “Create a wireless network” from the Wireless Mode pop-up menu, and then, select the “Allow this network to be extended” checkbox.
o Next, select the AEBSn, and then, choose Manual Setup from the Base Station menu. Again, enter the base station password if necessary.
o Choose “Extend a wireless network” from the Wireless Mode pop-up menu, and then, choose the network provided by the AXn from the Network Name pop-up menu.
o Enter the base station network and base station password is necessary.
o Click Update to update the base station with new network settings.
The problem isn't just that you have two devices using the same 192.168.1.1 IP address, but also that two network segments are using the same subnet (the first 3 parts of the IP, 192.168.1.x). If you're on the AirPort's LAN at 192.168.1.123 and you try to talk to the modem at 192.168.1.1, the network sees "192.168.1" and recognizes it as local traffic, meaning that it never goes out the WAN port where the modem is.
It's sort of like if I try to mail a letter to "123 Fake St, London". I mean the one in England, but there's a city called London right here in Ontario, so that's where the post office is going to send it.
Anyway, when you made your own subnetwork with NAT, you should have picked a new IP subnet to go with it. The AirPort utility calls this part of the IPv4 DHCP range, even though it affects more than DHCP. It's probably currently set to "192.168.1.100 to 200". Just change the third part to something else, like "192.168.0.100 to 200". This will move your entire LAN to the 192.168.0.x subnet, and the AirPort will take 192.168.0.1 for itself.
Best Answer
The DHCP works fine for the airport.
If you use ethernet and a static IP address, then you'll have to choose an IP address outside of the DHCP lease range otherwise you can get IP address conflicts.
For example, if your DHCP range is set to 192.168.0.10 through 192.168.0.20 then you can use the IP address ranges 192.168.0.1 - 192.168.0.9 and 192.168.0.21 - 192.168.0.253 for statically assigned IP address.
Hope this helps