I just did a clean install of Karmic on a system with the Linksys
WUSB54G. I booted from the install CD and was able to use the wireless
fine from that environment. Once I performed the install and booted from
it, wireless no longer worked - same symptoms as above. I could see my
network but not connect.

I just tried the advice at this page, which seems to have worked for me:
http://tredosoft.com/rt2870_ubuntu

"
Ok so you just installed Ubuntu 9.10 (Karmic Koala). The OS booted fine and you 
plugged in your RT2870 based USB wireless card (e.g. Alpha 802.11 n, Belkin 
etc.). Unfortunately, everytime you attempt to connect to a wireless network 
the Network-Manager app takes forever to connect but never succeeds. What to do?

There has been a bug report in the Release Candidate which interestingly
didn't get fixed in the release version of Karmic Koala (Available here)

Apparently, RT2800usb and RT2870sta drivers compete to operate your
wireless card resulting in no wireless connectivity. This from what I
remember was a problem I faced with 9.04 as well.

The solution is to simply add the line
blacklist rt2800usb

in the file "/etc/modprobe.d/blacklist.conf"

Restart Ubuntu and voala! Its alive!
"

ID 13b1:000d Linksys WUSB54G Wireless Adapter
Kernel 2.6.31-14 fresh from the install CD, no updates.
Motherboard: Gigabyte GA-MA78GM-S2HP 780G

-- 
Linksys WUSB54G won't connect to wireless network with karmic kernel
https://bugs.launchpad.net/bugs/472953
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