It's my understanding that, while you can use WEP keys with wireless Linux drivers, the router must be set to OPEN, not pre-shared. I saw this, I seem to remember, in the sourceforge.net/madwifi projects forum. I had the same problems as you were having and once I changed my router to OPEN I was able to connect with my WEP key just fine.
WEP Shared Key wireless encryption and general etc's
in Linux Networking
Posted
It's my understanding that, while you can use WEP keys with wireless Linux drivers, the router must be set to OPEN, not pre-shared. I saw this, I seem to remember, in the sourceforge.net/madwifi projects forum. I had the same problems as you were having and once I changed my router to OPEN I was able to connect with my WEP key just fine.