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Assuming the WiFi works on the X3i (which you could check by going to a public hotspot), it's robably a setting on the router that is causing the problem.
Make sure the router is set on mixed mode (B+G) or B only;
Set it to broadcast the SSID;
If MAC filtering is enabled, make sure you've entered the X3i's MAC address correctly (these are hexadecimal, so if you have something that looks like 0 and 1, these are the numbers zero and one, not the letters O and l);
Try disabling WEP temporarily. If it works while disabled, re-enable and make sure you are entering the key properly (same facts apply as for MAC address. You do need to enter it in hex format - 10 or 26 characters, not a passphrase);
I generally figure there is a major problem with the settings if DHCP does not work and it really complicates your life if you want to ever use the PPC at hotspots since it s a real PITA to switch from static to dynamic IPs on PPCs.
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