Just so you know, it is a Graphite (the old, original Airport). I have it connected to a Westell DSL modem, and the DHCP is turned on.

I have done it both ways, a) assigning an IP address to the 770, and b) letting it get its own IP address, and both worked fine. Two things that you have to be sure of here:
1. You must put in the correct WEP password. It will connect, and the 770 will see the Airport network, but will act flaky if the password is wrong, and this is the same thing that a PC does - it shows the connection, like you are ok, but won't transfer data.

Also, on this, a friend of mine was running a LinkSys router, and they won't allow a 40-bit or 128-bit WEP password. I had to switch him to something like WEP Shared, which the 770 will do, and the PC will do, and then he was ok. He was trying a 64-bit WEP on the LinkSys, and a 40-bit WEP on the 770, to no avail.

2. If assigning an IP address manually, you must also assign the DNS servers - easy to overlook. Once again, it will connect and you will think it is working, but no data wil come through. You will get these DNS server settings from within MacOSX's Airport Admin Utility. Whatever is there, and works, needs to be in the 770. Also, if you did not know, the gateway in that case, is the Airport, so the Gateway address is the IP address of the Airport.

Hope this helps someone.