So if im following you correctly there, you have assigned the extender 192.168.1.1 through the web browser set up page.

then in PEP2 you have assigned a 192.168.1.1 address too?

which window of PEP2 is that you have added that IP address?
along side where you entered the SSID info? or in the pop window for adding extenders?

if is the first option there then you have assigned the remote the same IP address as the extender hence why the remote is not getting an IP address and not working as the extender already has it.

also most routers have a factory assigned address of 192.168.1.1. so your probably having issues there too.

Also you should log into the router and find out what the DHCP range is set to and make sure your pronto hardware is set out of it to prevent conflicts when the router gets a DHCP request.

so if your router has a DHCP range of 192.168.1.2-192.168.1.50 then set the pronto address as eg. 192.168.1.100 and 192.168.1.101. either address for either item, doesnt matter which way around.