Are you certain you have the kernel source for your kernel? Are you in the correct directory when running the `make' command?
There should be a `Makefile' in the kernel source's base directory. The make program is complaining because there is no Makefile.
I would recommend running `make oldconfig' before 'make menuconf'. Doing this will use same settings as the current kernel. If you are updating kernels, you will be prompted for new items. This way, you don't need to wade through options you aren't interested in. Just make changes during 'make menuconf' that you are interested in.
Before that, please check whether this atheros card is supported by the ath5k or ath9k native atheros kernel drivers. Development had stopped with madwifi and moved to ath5k some time ago. It looks like it has started up again.
The madwifi driver requires a propriety blob. I haven't used madwifi myself, so I don't know if this blob is included with the source. But if the ath5k or ath9k will work, you could save yourself a lot of time.
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