I faced the same problem and found that the garbled text was actually
the hex equivalent of the ascii passphrase/key.  Once I entered the key
in hex on my AP (most APs support this), the authentication works fine.
So the actual bug seems to be that the key is being stored/transmitted
only in hex, which has a quick workaround.

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Wireless WPA key corrupted
https://bugs.launchpad.net/bugs/339046
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