Typically, for a home network, allowing the automatic configuration is best. For security purposes, you can define/limit connections to your router by setting these fields manually.
In my experience, the most common reason for wireless connections to fail, is because of network passwords, network IDs, or whatever your router calls it. The best thing to do to at least establish a connection, is to turn off the security function from your routers web page. For Linksys, its 192.168.1.1; For D-Link and Netgear, its 192.168.0.1
There are several types of encyrption:
WEP is an older network security method that is still available to support older devices, but it is no longer recommended. When you enable WEP, you set up a network security key. This key encrypts the information that one computer sends to another computer across your network. However, WEP security is relatively easy to crack.
WPA encrypts information, and it also checks to make sure that the network security key has not been modified. WPA also authenticates users to help ensure that only authorized people can access the network.
There are two types of WPA authentication: WPA and WPA2. WPA is designed to work with all wireless network adapters, but it might not work with older routers or access points. WPA2 is more secure than WPA, but it will not work with some older network adapters. WPA is designed to be used with an 802.1X authentication server, which distributes different keys to each user. This is referred to as WPA-Enterprise or WPA2-Enterprise. It can also be used in a pre-shared key (PSK) mode, where every user is given the same passphrase. This is referred to as WPA-Personal or WPA2-Personal.
The 802.1X wireless security type is used as an additional layer of security that can be used with both WEP and WPA networks. Under this security, a special server is used to validate network users. Essentially, this server contains a list of users who are authorized on the network. Users with the proper permission are allowed to connect, while unauthorized outside users are blocked.
Using the 802.1X security type in conjunction with an additional encryption type, such as WPA, is usually very secure. In this setup, not only is wireless data encoded, but only pre-screened users are allowed to share data. This high level of wireless network security is common in business or government settings where sensitive data is present.