pinging 127.0.0.1 just tells you that your network card is operational and reacheable by your system.
I have a couple of suggestions - check them out and let me know what you found out.
- Go to Network Connections / Local Area Connection / General Tab / Properties / Internet Protocol (TCPIP) (from the list)/ Properties. Are all settings set to "Obtain automatacally..."?
- Is your operating system Windows XP Home or Professional (with Service Pack 2 installed)?
- Have you installed the AirPort Utility software that came on the CD? (Check Start > All Programs > AirPort)
- You have to have the software installed in order to setup the router.
- What is your internet connection: Cable or DSL?
- Take a look at this document "Designing AirPort Networks" which is also on the CD that came with the device. If you don't have it, here is the download (link). Go to page 25 and follow the instructions for PPPoE (if you have DSL service) or DHCP (if you have cable service).
Let me know how that works for you and if you have any more questions, just come back here and leave a comment - I'm happy to look further into that if this did not work for you.