If the router shows connected, the problem lies outside the router on the client side.
1. See my notes and the utilitiy recommended in this FAQ: faq779-4625
2. On the client, disable 802.1x authentication. Until you resolve the connectivity issue, disable WEP and/or WPA on both client and router.
3. If XP as client, be certain you have applied this rollup for wireless connections:
4. Do not disable SSID broadcast on the router until every other connection issue is resolved.
5. Change the SSID to something unique, and change the default channel to 1 or 11. Set the router to "Mixed" mode, even if using all B or all G devices.
6. See the firmware choices available from third parties from Wi-Fi Box and Seavsoft:
In any case, search with the keyword "WRT54G" and spend some time reading the responses.
7. You do not specify your broadband link. If using DSL, configure the router, and all clients to an appropriate MTU and RWIN value. The only sane way to do this is to test it. Use the BroadBandReports site, and the freeeware DRTCP to establish the valid values for the clients. The WRT54G on its setup page allows you to set a Manual MTU that is appropriate for your site:
Make sure you make the recommended changes at both router and client. For example, most DSL requires 1492, most cable systems the default 1500. But there are many exceptions to this.