Airplay not working for audio but works for video and win7?

Right now I can't seem to get airplay to function correctly on my new macbook air (os x 10.7.1).

My current hardware:

Intel Core i5 Macbook Air 1.7Ghz 13"

Airport Extreme (current generation - 5th)

Apple TV 2

Airport Express

All updated to latest version (OS X 10.7.1, iTunes 10.5, updated airport express & extreme and apple tv 2 - don't remember version #s - sorry)

Symptoms:

In iTunes, I can select either the Apple TV 2 or Airport Express.

When I do, a window pops up with a loading bar, "Connecting to Apple TV" (or Airport Express). This never goes away/connects.

If instead of audio, I try and stream a video to the ATV2, it connects and works instantly.

I can switch quickly from video to audio and it will transmit fine for the duration of that song.

The ATV2 can see and connect to my itunes library and stream music through homesharing (i.e. selecting the music through the ATV2 as opposed to sending it through airplay from itunes)

Itunes running on my fiance's laptop (HP Win7, itunes 10.5) can airplay to each of these devices flawlessly.

Any ideas? I've confirmed that home sharing is turned on. Airplay is turned on. (this is true for the macbook air, apple tv, and airport express). Firewall on or off on the macbook air doesn't have an effect on this issue. I've also reset and reconfigured the Airport Extreme, Apple TV 2, and Airport express. I don't want to yet on the macbook - this problem existed from day 1 and I'd rather not do a full reset/restore on the laptop if I don't need to.

Thanks for your help.

Tim