driver does not support WPA?

[engage]

The output of wpa_supplicant ...... -d indicates that the driver for the 
wireless card doesn't support WPA while dmesg | grep wlan0 indicates that it 
does. How can this be? I have the same wireless device on another PC that 
works fine with this driver.

Trouble computer: MSI Athlon 64 running 32 bit version of Mandriva 2006, 
custom kernel 2.6.16.16, WUSB54G version 4, driver rt2500usb

Good computer: MSI Athlon running 32 bit version of Mandriva 2007, stock 
kernel, WUSB54G version 4, driver rt2500usb

Initializing interface 'wlan0' conf '/etc/wpa_supplicant.conf' driver 
'default' ctrl_interface 'N/A'
Configuration file '/etc/wpa_supplicant.conf' -> '/etc/wpa_supplicant.conf'
Reading configuration file '/etc/wpa_supplicant.conf'
ctrl_interface='/var/run/wpa_supplicant'
ctrl_interface_group=10 (from group name 'wheel')
Priority group 0
   id=0 ssid='$$$$'
Initializing interface (2) 'wlan0'
EAPOL: SUPP_PAE entering state DISCONNECTED
EAPOL: KEY_RX entering state NO_KEY_RECEIVE
EAPOL: SUPP_BE entering state INITIALIZE
EAP: EAP entering state DISABLED
EAPOL: External notification - portEnabled=0
EAPOL: External notification - portValid=0
SIOCGIWRANGE: WE(compiled)=19 WE(source)=18 enc_capa=0xf
  capabilities: key_mgmt 0xf enc 0xf
Own MAC address: 00:18:39:04:43:4d
Driver does not support WPA.
wpa_driver_wext_set_key: alg=0 key_idx=0 set_tx=0 seq_len=0 key_len=0
wpa_driver_wext_set_key: alg=0 key_idx=1 set_tx=0 seq_len=0 key_len=0
wpa_driver_wext_set_key: alg=0 key_idx=2 set_tx=0 seq_len=0 key_len=0
wpa_driver_wext_set_key: alg=0 key_idx=3 set_tx=0 seq_len=0 key_len=0
Setting scan request: 0 sec 100000 usec
Added interface wlan0
Wireless event: cmd=0x8b06 len=8
RTM_NEWLINK, IFLA_IFNAME: Interface 'wlan0' added
RTM_NEWLINK, IFLA_IFNAME: Interface 'wlan0' added
State: DISCONNECTED -> SCANNING
Starting AP scan (specific SSID)
Scan SSID - hexdump_ascii(len=6):
     67 6f 41 77 61 79                                 $$$$          
Scan timeout - try to get results
Received 257 bytes of scan results (1 BSSes)
Scan results: 1
Selecting BSS from priority group 0
0: 00:12:17:e2:8d:05 ssid='$$$$' wpa_ie_len=26 rsn_ie_len=0 caps=0x11
   selected based on WPA IE
Trying to associate with 00:12:17:e2:8d:05 (SSID='$$$$' freq=2462 MHz)
Cancelling scan request

ndiswrapper version 1.21 loaded (preempt=no,smp=no)
ndiswrapper: driver rt2500usb (Linksys,10/17/2005, 2.01.00.0000) loaded
wlan0: ndiswrapper ethernet device 00:18:39:04:43:4d using driver rt2500usb, 
13B1:000D.F.conf
usbcore: registered new driver ndiswrapper

wlan0: vendor: 'Linksys Wireless-G USB Network A'
wlan0: ndiswrapper ethernet device 00:18:39:04:43:4d using driver rt2500usb, 
13B1:000D.F.conf
wlan0: encryption modes supported: WEP; TKIP with WPA, WPA2, WPA2PSK; AES/CCMP 
with WPA, WPA2, WPA2PSK