I want to extend the range of my network

You won't be able to use that old clunker. Get a new Airport Express - $99 - for your needs.

AirPort Express frequently asked questions (FAQ) -

http://support.apple.com/kb/HT1515

Extend the wireless range of your existing Wi-Fi base station

Just be careful when using new Apple equipment. They don't always make it very backward compatible and you don't want to have that mess you up with an older wireless unit or older operating system.

I have a fairly similar situation but my problem is foil backed insulation, as well as brick/stone walls.

My Netgear router is in the downstairs hall, beside the phone master socket. I use two Airport Extremes to extend the network downstairs and upstairs, via the stairwell as you suggest, to an Airport Express.

Before this setup I tried using Netgear & DLink range extenders but they were unreliable and were returned. The Apple gear is a lot more expensive but it does work!

Any hope?

It can be done. But the fact that it can be done does not mean to imply that it should be done.

You might have a bit more wireless coverage mixing the older "b/g" AirPort with the newer "n" AirPort that you have, but even if you can manage to get things working....the configuration is quite difficult for most users....there will be a tremendous performance drop on your network.

You will have to use the older WDS settings for this type of setup. WDS operates at "g" wireless speeds only, so you will lose any advantage of having the newer "n" AirPort Extreme.

Worse, the bandwidth on the entire network drops by 50% in this type of setup. The result will be that you will have a "g" wireless network running at half speed.

To get an idea of this type of configuration, you can review Apple's step by step guide:

http://support.apple.com/kb/HT4262

If you decide to use a second newer AirPort Extreme, then you can use the "Extend a wireless network settings" with which you are familiar. This will maintain much faster "n" speeds on the network....and it is much easier and faster to configure than the WDS setup.

As another option that you perhaps had not considered, is to use a pair of Ethernet powerline adapters to send an Ethernet signal over the AC power lines in your home. In other words, you already have the wiring in place....you just need the adapters.

The "best" option in terms of performance is to run an Ethernet cable from one AirPort to another, but I doubt that the construction of your home would permit this easily. So, the adapters might be the next best bet.

Frankly speaking....wireless only connections between routers, even with newer devices is somewhat "iffy". You do not know if it will work until you try it.

Connecting the AirPorts using an Ethernet connection is called a "roaming" network. The advantage of this approach is that you would not have to replace your older AirPort as it will perform up to its full capability when used with an Ethernet connection.

Apple's instructions for a "roaming" network are here:

http://support.apple.com/kb/HT4260

Two "newer" AirPort Extremes are pictured, but the instructions for your "older" AirPort Extreme would be exactly the same.

Post back if you need more informaton....including some cautions on using the Ethernet powerline adapters.

If I use the Ethernet power line adapters are these to replace the Ethernet cable, so joining the airport extremes using the house wiring?

Yes. Basically, all you need to do is install one adapter in a wall AC socket near the "main" AirPort Exteme and connect a short Ethernet cable from the AirPort to the adapter.

Then install another adapter and another short Ethernet cable upstairs where you want to locate the other AirPort.

This way, you can locate the AirPort exactly where it is needed for best wireless coverage.

As you note, going the "wireless only" route.....a newer AirPort Exteme will need to be located where it can receive a strong wireless signal in order to be able to "extend" it. That location may or may not provide the extended coverage that you really need.

Ethernet powerline adapters usually work very well. But, as you might imagine, it is also possible to pick up noise on the AC line, which can affect, limit, or not allow the Ethernet connection.

For that reason, it would be a good idea to understand the store's return policy in advance in case you need to try a pair from another manufacturer....or worst case...the adapters and wiring in your home just don't work.

You were lucky: Extending a network most of the time does not work well when using equipment from different brands. Normally it works well when using equipment form the same brand.