Unless you have the modules loaded before ifcfg-wlan0 inits, yeah its always going to hork, the device doesn't exist yet, it was changing settings to whatever eth0 is and piping all the errors, if there were any, to /dev/null.
If you put an entry in modules.conf that should take care of it, but really, I always modprobed p80211 and prism2_pci in /etc/rc.d/rc.local, and then manually set them with calls to ifconfig and route or simply dhcpcd.
If you try to put any wireless setting calls in ifcfg-wlan0, they're going to get ignored, the script will send arguments to "iwconfig", which the linux-wlan project's prism2_pci driver has never worked with. They ignore in-kernel wireless extensions, are not compatible at all, and any correct read you get off of the card from iwconfig is coincidental. All settings are made in that wlan startup script, so to make changes while the machine is on, you have to bring the device down, edit that script, and then run it again. Then of course ifconfig the device again.
About those soft links, they're if you want to do everything "properly" for start-up. Again, stick it all in rc.local is easiest. Heck, this should work:
modprobe p80211 (do they still have this module?)
modprobe prism2_pci
ifconfig wlan0 192.168.0.23 up (a guess at what your IP should be)
/etc/pcmcia/wlan-ng.opts (that's the script right?)
route add default gw 192.168.0.1 (a guess at your wireless router's IP)
Some of these toys just won't send or recieve a dhcp request right, but alternatively that last line could be:
dhcpcd wlan0
As for the .conf file, I've never used encryption, or more to the point, gotten it to work with the linux-wlan drivers, but that was very beta days, long ago.
lnxreq_hostWEPEncrypt=false # true|false
lnxreq_hostWEPDecrypt=false # true|false
These might have to be true.
Also, later on the list, you have the default key set to key0, which further down is blank... did you set the key to match the one on your router?
May I also recommend, these drivers, that work with iwconfig:
http://hostap.epitest.fi/
Luck,
Finegan