If your Westell modem (actually, it is likely a gateway...a combination modem/router) is set up for "PPP is on the modem", then the AEBS should be configured to Connect Using = DHCP or Ethernet. The AEBS also needs to be configured in Bridge Mode.
Open AirPort Utility, click on the AEBS, and click Edit
Click the Internet tab and change to setting to "Connect Using DHCP"
Then click the Network tab and set the Router Mode for "Off (Bridge Mode)"
Update to save changes and restart the network by powering everything off in any order that you want. Then start the Westell device first, followed by the AEBS a minute later, etc until everything is powered back up.
This type of setup may work OK for you.
If not, you will need to change the Westell setup to "PPP is on the router" and then configure the AEBS to provide the PPPoE service as you did originally.
AT&T does generally advise that the modem should be in "Bridge Mode" or "PPP is on the router" when other routers are used with the "modem". See this document for more info:
Most DSL modems are set up to provide DHCP over ethernet. All you need to do is plug the DSL router into the WAN port of the AEBS and then set up the base station per the instruction in the manual. I ahve been seting them up for years as a ACMT with an Apple Authorized Service Provider and this is how I have set them up. It is less confusing than seting it up in bridge mode and your DSL provider only sees that one IP is being used. If you have any questions you can contact me.
I do independant contracting now but ehre is my web site. http://www.encmacmds.com.
How do you avoid a Double NAT situation with the setup that you suggest?
If the DSL modem is providing DHCP and NAT.....and you setup the AirPort to Share a public IP address....you have Double NAT on the network.
That's a show stopper for just about any online gaming console, security camera, etc., and the extra NAT layer slows down the entire network.
Thanks so much for the ideas- the bridge idea would not connect to the internet, but the AEBS had a green light. The setup per instructions idea kept prompting me for PPPoE - so what I did was take screen shots of the settings in the aiport utility for the old AEBS (that connects fine) and found that: 1) Under Internet tab: connect using DHCP and 2) Under Network tab:Router mode: use DHCP and NAT and duplicate those when I reset the new AEBS. Well, the internet now works wirelessly - though the amber light blinks and a double NAT status is indicated by a blinking amber dot in aiport utility. Interestingly, on my older (with updated firmware identical to the new one) AEBS the green light glows next to the double NAT status, but on the the newer AE - the light is blinking amber. Still, the wireless works. Should I worry about the blinking amber light or double NAT?
Blinking amber means that the AEBS is trying to tell you something. It is not happy.
The version of AirPort Utility that you are using is lacking in a number of features and functions. It probably will not tell you what is wrong.
Suggest that you download and install AirPort Utility 5.6 for Mac OS X Lion
Open AirPort Utility 5.6, select the AEBS and click Manual Setup
Click directly on the word Status (2nd line) and a window will open to explain why the AEBS is complaining. AirPort Utility will try to suggest a remedy
Double NAT means that you have two devices...both trying to act like routers on the network. This can cause IP address conflicts on the network and it definitely slows down the network. This is what I meant when I said that the Westell device was likely a gateway. It is both a modem and router.
To eliminate the Double NAT error on a network, one of the devices needs to be in Bridge Mode. That can be either the Westell device or the AEBS.
You may need to check with AT&T if you cannot get the Westell to function correctly when it is in Bridge Mode. Additional adjustments may be required on the Westell device.
Don't forget that if you set the Westell to Bridge Mode, that the AirPort must Connect Using PPPoE.
It might be a good idea to reset the AirPort back to Factory Default settings to clear out all the older...and likely conflicting settings.
Power off the AEBS
Wait a few minutes
Hold in the reset button and contine to hold it in for another 7-8 seconds while you plug the power back in to the AEBS
Release the AEBS after the hold period and allow 25-30 seconds for the AEBS to restart to slow, blinking amber light
This Apple support document has all the details: