It seems OZ3.5.4.1Alpha2 is missing some modules to have WEP / WPA work correctly:
For WEP, trying iwconfig wlan0 key myhexkey gives the following error:
Error for wireless request "Set Encode" (8B2A):
SET failed on device wlan0; Operation not supported
dmesg tells me: wlan0: could not initialize WEP: load module hostap_crypt_wep.o
So that must be the reason. Now let's find out where is this module...
For WPA, running wpa_supplicant gives:
skip - no WPA/RSN IE
when selecting my AP...
I see those files in the feed, but I don't know what they are used for (WEP support is supposed to be in the hostap module?)
kernel-module-ieee80211-crypt-ccmp-2.6_2.6.16-r5_spitz.ipk
kernel-module-ieee80211-crypt-tkip-2.6_2.6.16-r5_spitz.ipk
kernel-module-ieee80211-crypt-wep-2.6_2.6.16-r5_spitz.ipk