Q: How I set up older Airport Express 802.11g on Mountain Lion.

Actually, there's a good workaround I just discovered after researching this problem for a couple of hours:

After much searching and gnashing of teeth, I found that the problem was the version of Airport Utility that I was using—Airport Utility 6.1 (as others have already pointed out on this thread). I downloaded Airport Utility 5.6 and modified it with the help of this video: http://www.youtube.com/watch?v=Bw0Pluw01xs to work with Mountain Lion. It recognized my old Airport Base Stations (Model A1084) and worked like a charm to configure them.

Great Work Mate your a life saver

the people that are having truble with it, you want to tell them to turn off the security seting in what application it allows to open. It's in setings to only open in Mac App and identifield developers.

Thanks sethertonb! This worked great...

First of all, thank you Bob for a neat solution to the version thing. Unfortunately at restart after successful installation and configuring, I ran into the same problem as you, willchase. I know that I am late to the party, but did you by chance solve it on your own?

I'd be most grateful for any hint. In short: Airport Utility 5.6.1 in Mountain Lion will find the Airport Express for configuration but won't find it after restart. Amber light blinking on AE.

Thanks

Amber light blinking indicates it encountered network problems.  Which is why you cannot find the AE after restart. 

Could be a bad configuration or settings issue but if you had double checked, the other possible issue that comes to mind could be interference from other wifi networks in your location.  The AE is pretty robust to interferences but its worth a check.  Manually select a channel far as possible from other networks.

Ditto, resorted to loading Airport Utility on an old Windows netbook that I use for scanning fault codes on my car. Fortunately it worked and I've been able to restore the 2 Airport Express units which feed iPod docks around the house. As Apple obviously see these 'G' models as 'outdated' they'd rather not support them and probably assume I'm stupid enough to bin them and go and buy new 'n' versions to get round the issue.

In the last year or so I've been absolutely staggered by how thoughtless and arrogant Apple's approach to backward compatibility has become.

After 20 years as a loyal customer whose spent tens of thousands of GBP, by forcing me to pick up a Windows PC to reconfigure my Apple network it has finally pushed me beyond a point of return. I'd be hard pushed to recommend Apple to anyone again after being a strong advocate for many years. Way to go guys, you're so busy counting the cash you can't see the wood for the trees (/rant over, and apologies to OP).

You can use the methods to install version 5.6 on Mountain Lion. I would agree it is irritating but 6.2 is clearly a lite edition. This approach to compatibility appears to be all too common with IT companies.

AWESOME!!!!!!!!!!!!!

This worked like a charm for me. Kudos to the guy who wrote that solution!

missed_call, thanks for the link to the airport utility 5:

http://bit.ly/NheUu6

I know this is an old post but here's my solution anyway - I had the same issue and just copied and pasted the app from an old backup file (when I used Snow Leopard) and used that to set up my Airport Express on my iMac (Mountain Lion). It worked fine.

I think if apple cannot fix this problem in the next 48 hours they should Send everyone who uses an old airport express 802.11g A brand new up to date one that will be compatible. LEts get on them.. I have been buying apple since 1980  and frankly im a bit upset with all this change so quickly  no watch this new maverick wont support anything.

As mentioned a bit earlier in this thread, it is 100% possible to configure older AirPort units under Mountain Lions.  While v6.2 (and, perhaps, v6.3) of AirPort Utility does not work with older AirPort units (and does not have the same functionality of the earlier versions of the utility [e.g., no support for logs and such]), v5.6.1 works with older devices and can be run under OS X 10.8 Mountain Lion.  However, you either have to do a bit of command line work (or just extract some files from the application once downloaded) or you can go the easier route and simply download a working copy of v5.6.1 from here: http://coreyjmahler.com/2013/03/08/airport-utility-5-6-on-os-x-v10-8-mountain-li on/.

Zyniker13 is right on. It took me hours (of course) to arrive at this same solution. Downloaded, installed and failed with most all of the previous solutions, but his link above downloads exactly the v5.6.1 version ready to launch and to drop into Applications if you like. I still had problems with Mountain Lion holding the connection to my Express. I use it to wifi print with a USB printer, and I could get the Airport Utility to find my Express, print a page, and then it disappeared. Disconnected the Express, reconnected it and refound Express multiple times with soft and hard resets. The Utility would find Express, and a minute later loose it. I finally did the factory reset and reset up the whole thing, and so far so good ... the network seems to be holding. My advice is to cut to the chase, download from above link and factory reset. Much less painful.