Then I came on this post from "foreverNewbie" from this thread
http://www.suggestafix.com/index.php?showtopic=23614
QUOTE
I have worked with wireless networks in varying environments, generally it seems as though you get this same problem when you have not entered either one of two things correctly; the encryption key EXACTLY as you had it saved in the AP and the TX key on which the password is being looked for.
Check aplhanumeric character/hexadecimal digit entries and ensure that they are the same on both ends. Also re-check the transmission key.
Check aplhanumeric character/hexadecimal digit entries and ensure that they are the same on both ends. Also re-check the transmission key.
I thought it pretty silly but I had tried everything else and it was worth a shot. So I wired up my laptop, cut and pasted in all four encryption keys even the ones I wasn't using, unwired it and changed my wireless configuration settings:
Click to view attachment
And lo and behold, it worked!
So thanks to "foreverNewbie" and this forum for fixing the problem and hopefully a lot of people who have my same problem can fix it this way. It sounds really stupid and might be a vendor/platform/client specific problem but seems there's a lot of people who get "can connect to router with 100% signal strength but no assigned ip when using encryption" so I thought I would post my success (and give thanks)! It sounds very stupid to have to put in all four keys even the ones I'm not using, but it worked so there it is!
Happy Halloween!