Technobear, I also have issues with WEP. I see the networks, but the iLiad can't connect to my wifi network. I have the right passphrase, I also tried without passphrase, and it doesn't work.
I did what you advised, and althought it tried to connect longer than before, I got the "failed" message as before.
I have the impression it has something to do with the IP address not generated, but I have no idea how to solve this.
Any clue ?