I can only get a flashing red light on Surfboard when connecting to Extreme, and internet connection occasionally drops, but I get a flashing blue light on Surfboard when connecting directly to iMac with ethernet cable. Any thoughts?
A thought would be that the modem has associated itself with your iMac.....so it will basically ignore the AirPort Extreme.
The modem needs to be reset so that it can recognize the iMac. To do that, you would need to......
Power off the modem by pulling the power cord from the back of the device
Remove the co-ac and Ethernet cable from the modem
Leave the modem powered off for at least 30 minutes....60 would be better
Power off the AirPort Extreme as well
After the modem power down period......
Connect the co-ax connector to the modem
Connect the Ethernet cable from the modem to the WAN "O" port
Power up the modem and let it run for at least 10 minutes
Then, power up the AirPort Extreme and let it run a few minutes
Check the connections.
We've given you the best opportunity for things to work.....but as Tesserax correctly points out.....the SB modems and AirPorts just don't seem to get along very well together. I have experienced the same issues myself as well in the past, and the only solution for reliable performance was to replace the modem. An alternate solution would be to keep the modem and replace the router.