You mustn't comment out SetPrism2Defaults from your startup scripts. This is how the wireless settings get set, so you can't use WEP otherwise. If it's giving you an error, try running it in the shell after you boot as a test. Make sure it's in C: too.
Also, don't use shared key authentication; prism2.device doesn't support it. And does your card not support 128-bit WEP?