Have you tried to make it work while wireless security is disabled? You may try that first. Also make sure that the wireless mac is correct>> on the set up page of the router> click status> wireless sub tab> here you can find the correct mac address.
Thats the first thing I done was upgrade both firmwares to ensure I had as least problems as possible, Im not network guru but I kind of know enough to get things worked out within a little time, I think the WAP54G is not working as it should.
Im checking out the Buffallo stuff, they have a nice router repeater combo, ive heard good things about there products I might give them a try.
I appreciate all your help, I wish this stuff would just work....