Wireless only works with encryption disabled

System: win7 build 7057, build 7201 and Build 7600

Background
I had Win XP pro SP3 installed on my primary partition.
Then I installed Win 7 build 7057 on my secondary partition - working like a charm.

I had a minor problem with IE 8 and flash - and decided to download a newer version to see if the problem had been solved - Build 7201. This I installed over the XP on the primary partition. (it moved the old windows to a different folder, and installed Win7.

But, here the problem started. The 7201 would only connect to my wireless, if I disable the encryption. I tried WEP, WPA and WPA2 both versions and the option both. None of them worked. The 7057 on the other partition has no problems.

After a while I installed formattet the primary partition and installed the 7600 - same problem. It will only connect without encryption.
The latest attempt was installing the 7057 on the primary partition - but the problem remains - so the different builds are not the problem.
I know have a 7057 on one partition that works, and one on another that does not. I have not dared to try to install the 7600 on the other partition, because that is the only one that is currently working correctly. (I solved the problem with IE and flash - turned out the IE page was just zoomed to 95% messing up the flash text)

Info on problem:
Wireless only works when encryption is disabled - only affects installation on one partition.
Error:
I ask the system to connect to the wireless - it asks me for the security key, I enter that. It waits for 5 seconds and says "Windows was unable to connect to Danmark"

Event viewer:
I looked at the evet viewer and get the following two texts that I'm guessing is connected to the problem

Source: NVENETFD
Event ID: 5008
Text: NVIDIA nFroce Networking controller has encountered an invalid network adress

Source: Dhcp-Client
Event ID: 1001
text: Your computer was not assigned an adress from the networkd (by the DHCP Server) for the Network Card. The following error occurred: 0x79

Can you reset your router to its default settings and connect... Dont worry about WPA just yet, make sure you can connect with default settings first...

Very good... now go to your router setup and setup your wireless security... always use WPA2 or WPA personal for best security. ... WEP is obsolete ...

I have now enabled the encryption WPA2 - and as I try to logon I get the message "Windows was unable to connect to xxxx"

Eventviewer posts

Source: Time-Service
Event ID: 134
Text: NtpClient was unable to set a manual peer to use as a time source because of DNS resolution error on ". NtpClient will try again in X minutes and double the reattempt interval thereafter. The error was: The requested name is valid, but no data of the requested type was found (0X80072AFC)

Source: DHCP-Client
Event ID: 1003
Text: Your computer was not able to renew its adress from the network for the Network card with the adress xxxx. The following error occured: 0x79.