Still haven't solved the problem... For the record, the internet does work but only after issuing dhclient wlan0 (as stated in previous posts).
Think dmesg shows the Problem as
IPv6: ADDRCONF(NETDEV_CHANGE): wlan0: link becomes ready
. Only trying IPV6 connections. No wonder I don't get automagic internet like I should. Guess because I don't have IPV6 hostname set (only ipv4). Will have to double check why wicd and nm-applet only make an IPV6 connection.
/etc/hosts file had loopback address (127.0.0.1) set to machine name so it was actually set to two host names (localhost and machine name). Changed machine name to something else, rebooted, and internet connected just fine! Now I know what happens when the loopback address is set twice for one local machine.
Going to wait a little bit before I mark this thread as solved. Thanks much for the help!
Yup still works. Seems that was the problem.
Okay actually not... It still happens. Could it be firmware related?