I have been having the same problem. However, it appears in my case to
be restricted to the internal wifi adapter.

Here is a copy of my recent post on Ubuntu Forums:

"I have the same problem here but the following may help those trying to
diagnose it.

Machine - Acer Aspire 4310
OS - Ubuntu 8.10 Intrepid upgraded from hardy.
On-Board Wifi - AMBIT Microsystem (Broadcomm) BCM 4311 802.11b/g.

With this onboard wifi card I have exactly the same problem as reported
above even after installation of the restricted STA Broadcom Driver. IT
asks for a password, while displaying what appears to be a hex value.
Even when I introduce the password it just hangs. No problem with
unsecured networks though.

However, I also have a Conceptronic C54RJ USB wireless adapter showing
up as an Atheros C54RU in network manager. This has no problem
connecting to WPA2 enabled networks.

So the problem appears to be a Broadcomm based problem on my part.

Any ideas as to how to proceed with further diagnostics would be
appreciated. "

I am running my Buffalo Router on Channel 6.

It seems to me that this a bug related to specific wifi chips rather
than a blanket problem.


** Attachment added: "lscpi_111108.txt"
   http://launchpadlibrarian.net/19558845/lscpi_111108.txt

-- 
[Ralink rt61] impossible to connect to WPA and WPA2 wireless networks
https://bugs.launchpad.net/bugs/293869
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