IMac causes WiFi interference / outage

Here is a general plan to start debugging this problem. Post your results and we'll help you figure this out. I'm running an iMac with Snow Leopard and these steps have helped me.

Write down key data for each machine for each wifi connection. I've included my data below.

Go to the iMac and hold down the option key while clicking the Airport icon in the menu bar. Write down the PHY, BSSID, Channel, RSSI and Transmit Rate.

Move over to the MBP and gather the same information.

Phy Mode this tells you if you joined the network as a B, G or N connection. I'm on an Airport Extreme N network using the 2.4 Ghz frequency.

BSSID - This is the access point you are logged into. They are likely the same on each machine. If they are different, your machines are logged into different access points.

Channel - This is the channel each machine is using. In my case, my neighbor and I were both on channel 1. I changed over to 11 and my speed improved since I was no longer fighting his interference.

RSSI - Received signal strength. Mine is -43 while my neighbor's is -88.

Transmit Rate - The higher the better. Mine is 130. I can't view the neighbor's rate but it's like less due to his lower RSSI.

If you see other nearby networks, you can view some information about their signal by moving your cursor over the other network and a small dialog box will pop up with their PHY, BSSID, Channel, and RSSI. This is how I found my neighbor was using the same channel as me.

You can also view this data in System Profiler under Network>Airport.

Have you tried the automatic configuration for the Express?

Don't do anything on the Time Capsule.

Do a cold reset of the express and bring it up on the Airport Utility. You should have an option to join an existing Airport network. Choose the option to extend the range. That should do it.