Why won't AirTunes stream without randomly dropping the connection?

Here's the network setup I have in place: In our home office, I have 2 iMacs running 10.5.6 connected via ethernet to an Airport Extreme base station. (They are also connected via AirPort, and everything works as expected if the ethernet cables are unplugged.) In my living room, I have an AirPort Express which is used primarily for my XBOX 360. The X360 is plugged into the ethernet port of the Airport Express. There is an audio out cable connected to the AirPort Express that runs to my amplifier. The X360 is connected to my amplifier via its own audio out cable. The AirPort network is configured as a WDS network, and both the Base Station and the Express are on software version 7.4.1

Here's the first mystery: If I stream music from either iMac to the AirPort Express, the audio stream will drop at random intervals, while the music continues to play on the iMac. The stream will eventually restart, but the recovery time varies from seconds to minutes with no discernible pattern. Does anyone know why this happens? During the stream drops I have no problem controlling the iMac via Remote on my iPod Touch, which suggests there's nothing wrong with the overall AirPort network. The physical connection from the Express to the amplifier seems fine, and I've tested the cable with other equipment.

Here's the second mystery: I have Connect360 installed on my iMac, so the XBOX can access my iTunes library. I can stream any of my iTunes playlists through the XBOX without the stream ever dropping out. How does the AirPort Express send a signal without interruption to my amplifier via the XBOX when it can't do the same thing via iTunes/AirTunes?

I don't have any problems with the AirPort network generally, and the Express works beautifully with my XBOX for online gaming, so I am puzzled by the signal dropouts that occur only when I stream music via AirTunes to the Express.

The XBOX interface is crummy for managing music when company is around for dinner since it requires the TV, but the elegance of being able to unobtrusively manage iTunes via AirPort and the iPod Touch is completely undone by background music that cuts in and out. I've been thinking about getting an Apple TV, but since it would be using AirTunes as well, I'm not convinced the situation would be any better.

Is AirTunes dysfunctional, or is there something that I'm doing wrong? I've combed through the Apple discussion forums and it's clear that many, many people are having similar problems with AirTunes, but I haven't yet come across any solutions that decisively fix the issue. We all seem to have had many experiences of thinking we've finally solved the problem, only to find after 15 or 20 minutes of smooth playback the stream has dropped again.

Any help or advice is welcome, there simply has to be an Apple solution of some sort if third party software using the same Apple network equipment can provide an uninterrupted stream from iTunes.