Similar problem - first Mac problem I've had in 25 years that's so intractable that I'm making my first forum post (and then probably my first support call to Apple). Unfortunately Fred360's solution isn't going to work for me as I have to have my Expresses in WDS mode, not client mode, to bridge a wired device.
I had an old Airport Extreme b/g (~7 years old) and two Airport Expresses b/g (~5 & 6 years old) set up in a WDS (Extreme as main and both Expresses as Relays). The Expresses are used for AirTunes AND to bridge a wired client (Tivos) to the wireless network. No encryption, running in g-only mode, with latest firmware (which hasn't changed for these old g devices in a couple of years). This worked perfectly for about 5 years, and then a few months ago I started getting the "WDS error..." described above. The only changes to the network at that time were adding two new iPhone 3GS's and a new MacBook Pro running Snow Leopard. The error primarily only affected one of the two Expresses (the slightly more distant one), and swapping the Expresses still generated an error in the same physical location (regardless of which Express was in that location).
Assuming that 7 year old base station was wimping out, I bought a new Airport Extreme b/g/n - which, sadly, did not solve the problem. If anything, it's worse now, affecting both Expresses at the same time. Interestingly, the old Extreme base works find as a 3rd WDS remote.
The problem is temporarily solved (for anywhere from a day to a week) by power cycling the Expresses (which merrily maintain their green light). Hard reset and re-setup of Expresses does not help.
Call it a wild hunch, but I wonder if it might be something about running Snow Leopard on computers on the network that has set this off. This was a perfectly stable set up for 5 years and the problems began about the time I got my new MacBook w/ Snow, and then expanded to the 2nd Express when I started running Snow on computers in it's vicinity.
I'd rather not downgrade the computers to Leopard to find out, or replace both Express units (I only kept the new Extreme base because I figured the old Extreme was near the end of it's life anyhow).