As the linksys support said (as always, unable to solve the issue), this is a weird issue that a lot of users are complaining about:
I have a WRT54G v5 + WRE54G v2, the DHCP is turned on in the WRT54G, all the clients in the wired network get an ip assigned by DHCP, the wireless client connected trough the ROUTER, get an ip assigned by DCHP, but the clients connected to the router trough the WRE54G, do not get an IP, i have to set an static IP to get wireless network working.
I have tried everything, upgrade the firmware, check the settings, disable secutiry, nothiing is working.
any idea?
Are the clients of the WRE54G on wireless as well or plugged in via Ethernet? If Ethernet then this would be expected with this type of client. Also when you mention the firmware update, was that the WRE, WRT or both?
Another possibility is that the repeater is struggling to receive a signal from the router (or vice versa) and this is very difficult to test with such a device except to locate it close to the router.
My experience with repeaters in the past has shown that they generally provide inconsistent performance. A bit of research shows that the WRE54G appears to have a fairly bad reputation, so if you are struggling to get it going taking the above tips into account why don't you return it and swap out for another product?