Could be a number of things and very hard to say by remote.

Could be that it's lost the WEP/WPA pass key. Are you sure it's really connecting to the access point? It might look like it's connected but if it doesn't have the right key it will never work of course.

It should be DHCPing an IP from the WRT54G. Do you know that's happening? Right click->Status on the systray icon or in Network Connections.

Malware/Spyware/Virus?

Do you know if your WRT54G has an IP 192.168.1.1? If so, Start->Run->CMD and the run "ping 192.168.1.1".

Whilst you are there at the command prompt, run "ipconfig /all" Given you don't have a working network, perhaps take a photo and post?

Direct Ethernet is a good start and rules out things like IE playing up. More than likely I suspect a network config issue.