Make sure that your NIC has the latest drivers, some older NIC’s do not handle WPA2-PSK at all. Try switching the security to WPA-PSK on both router and device and see if that works. You solution might just be to buy a newer WiFi Card for your system.
If you’ve tried the card in a different system and it works as expected (i.e. it connects to the network), then the issues does not lie with the physical network card at all. Does the other PC also have XP SP3 installed? I have run into several situations where the Intel 2200BG chipset (in particular) will not work with SP3 at all.
Of course, as stated above, the drivers need to be the latest revision
If the second computer IS running XP SP3, then check to see if there are any updates on the Packard Bell which are NOT resident on the other system, or any updates on the other system which ARE resident on the Pac Bell. Also, if the system is old enough, you may need to adjust the expansion slot properties: make sure that it (the slot) is set to “Bus Master = ON”, or if not possible, that the card is inserted into a Bus Master slot. Make sure that the slot you are using is NOT adjacent to the video card.
If none of that works, see if you can adjust the PCI slot properties (I’m assuming it’s a PCI based system…): if set to “LEVEL”, reset to “EDGE”. If set to EDGE, reset to LEVEL.
Keep us posted…