<posted & mailed>
I have experienced this issue myself. There are quite a number of KB
articles and web pages that blame the XP zeroconf service (which is clearly
deficient) and cutting that off seems to help some people. However, for
many that has no effect.
In my case, I have a Belkin router and several wireless cards of different
brands and models. Some cards do exactly as you describe under XP, even if
I turn off the zero-conf service. Now, if I use the exact same card with
Linux on the same machine(same configuration and encryption keys), the
machine connects to the access point just fine. So, I've concluded that
it's the Windows drivers. Unfortunately, there's really nobody to complain
to. The vendor really doesn't care if the card works for you or not with
anything but their own access points (certainly, their customer support
people don't care at either NetGear or Belkin).
One thing I should add is that I use exclusively 128-bit WEP encryption.
It's perfectly feasible that the issues are in some way related to the
encryption implementation in these drivers (settings are all the same, but
the hardware and hardware drivers differ from system to system).
If you recently bought the card, try and download a new driver from the
vendor or check their site. Try turning off the zero-conf service and see
if that helps. If all else fails, return the card and pick another from the
store.
Most of our machines are Linux systems, so they have no problems, but my
wife has a system she still uses XP on, and we ended up exchanging the
wireless card on her machine with one from another vendor that seemed to
work with our Belkin AP.