Have you installed the Service Packs from Microsoft -- notably SP1 & 2.
XP without SP2 will not support the required password lengths.
The alternative is to use (where available) the utilities supplied with the wireless adapter's driver pack from the manufacturer -- some of these support more advanced encryption options than XP does basically.
No I have not!
So I will do that first thing tommorrow, Im sure that will solve the problem. Thanks so much for your help!!!