I have this issue as well. I reported that the last firmware update killed by wireless. After forum advice I rolled back my firmware to 1.06.04 butI still have the problem so it’s quiet frustrating!
It did connect to my wireless at one time and worked fine up until I upgraded my firmware. But it has not for the last month even after the rollback:-(
As you describe it detects the network but does not accept the password. A netbook/phone placed beside it has no problem connecting.