shaun,
there are four dip switches on the opposite side of the transmitter from the heat sink. how they are set determines what frequency it's transmitting on. if you have a picture that fades out, try changing the channel of the receiver, you may be a channel above or below the channel the transmitter is set to.
also, orient the antenna of the tx and rx so they're parallel to each other. if you're using rubber antennae on both tx and rx they have to be oriented fairly parallel to each other or you'll lose signal and cause the receiver to switch back and forth in an attempt to get a better signal. when flying i usually have the two antennae on the receiver at 90 degrees to each other so one can be close to parallel at all times. it just has to do with how the whip antenna's radiation pattern is. there's a video somewhere that was posted with a great explanation of how the different kinds of antennae have to be oriented in order to work.
hope that helps,
bart