A few really random thoughts:
For giggles, asjogren, did you try turning off the security of the wireless router and then connecting? (temporarily, of course) If you still cannot connect, then you may want to look at the bottom of this post as your problem is most likely outside of the nook.
Is it possible that you should set the WEP key to AUTO mode rather than the second selection in the dropdown under the text input for your password on your nook? (I don't remember what the phrase was as my nook is at home) I had a few minutes of not being able to connect at home, I changed that setting (I will try to fix this post tonight if I remember) and it did work.
At some point my router had stopped broadcasting wifi as I couldn't connect with either my iphone or my nook... a simple restart of the router fixed that. You may want to try connecting wirelessly with another device before any of the above... of course I put this one last in the list, go figure
Since you are detecting the SSID I suspect this is not the issue.
Sorry for the random, stream of consciousness post. I will continue thinking about this and hopefully come up with a viable answer.