The 169.254.xx.xx addresses are what Windows falls back to when it's been told to get its IP address from another machine (the one acting as a DHCP server), but couldn't. The basic link is up (or else it wouldn't even try), but I have seen that happen when wireless security parameters were set incorrectly. I suggest you double-check those against any settings you made or were given.
Like the others who replied, I don't know what a "TUT Modem" is. Is there a model name/number on it? I think TUT means it's made by Texas Instruments, but that doesn't tell us what its role is in your setup, whether it is supposed to act as a DHCP server.