I had the same problem. All you have to do is unclick "Enable IEEE 802.1x authentication for this network". Mine worked perfectly from then on. You have to click on your network then click on authentication in the tabs and it will be there, just unclick it and presto!
My problem is similar:
Configuration:
A) Have one XP Prof connected via cable to WRT54G (firmware v3.03.1).
B) Have one XP Home edition connected to WRT54G via wireless (WUSB54G).
Distance between Router and wireless computer is less than 5 meters (no walls, signal good)
C) WRT54G Configured with 64bit WEP, most other settings in "default mode"
D) Running Norton Internet Security in both computers (tried to switch it off, but same 'status').
Status:
Wireless connection dropped about every 5 minutes (always seems to fail when I try to copy some large AVI files).
Actions taken:
1) Tried to unclick "Enable IEEE 802.1x authentication for this network" in computer A). Still same problem!
Note: In computer B), no Authentication tab is available for the network settings, and I can thus not unclick "Enable IEEE 802.1x authentication for this network".
What to try next ?