I'm surprised that the 11g device doesn't auto-detect 11b and downgrade itself to the WAP speed. Is there a configuration / BIOS setting that you can change?
The signal strength is a tad misleading - 11b and g both use the same spectrum, so it's a bit like plugging an ethernet network cable in, seeing you have a link light at both the hub/switch and the PC, but wondering why you can't communicate when the hub is set to 10 Mb only and the PC is set to 100 only!
SD