> It worked until that major version update of NetworkManager, now I see 
> NetworkManager CPU spinning in top,
> and no association.

What version of hal do you have installed?  This symptom ("CPU spinning
in top") points to bug #204768, fixed in hal 0.5.11~rc2-1ubuntu2.

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[hardy][iwl3945] 3945ABG cannot associate to public WPA2 PSK network
https://bugs.launchpad.net/bugs/203793
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