We recently replaced our old SliMP3 player with an AirPort Express. (Our music server was just having trouble driving everything.) I set it up to extend our existing network; everything seemed to work fine. When I launched iTunes, I saw a drop-down in the lower right corner of the window, allowing me (at least in theory) to send music to the speakers or to the new AirPort. So far, so good.
However, I was unable to actually choose the AirPort — as soon as I selected it, the drop-down reverted to its original (“Speakers”) state. Same thing happened when I tried to select multiple destinations; the AirPort wouldn’t stay checked.
The problem appears to have been in the AirPort Utility. When you extend a network, it copies most of the settings from an existing AirPort. However, it copied the Bonjour name of the existing AirPort, which created a conflict. The new AirPort Express was able to advertise its capabilities via Bonjour, but it sent the old AirPort’s name as its own. When iTunes attempted to connect to the new AirPort, it used the same name as the old one, which wasn’t able to handle the music.