The fact that you CAN connect to the wireless router briefly makes me thing that your settings are just fine - WEP or otherwise.

What are you using on the PC to connect wirelessly? A wireless PCI card? A Wireless USB adaptor? If so, did it come with its own software/drivers to install? If it did than most likely XP's built in wireless networking software is conflicting with your wireless adaptor's software.

What you have to do is open up your wireless network connection properties and uncheck the box that says "Let XP handle my wireless connection" or something to that effect.

I had a very similar sounding problem with a wireless connection on an XP machine just last week that was resolved this way.

- trs