limited or no connectivity with wireless, but local area connection works

Using my rj45 ports with a cat 5 cable I connect to the internet with my
laptop with no problems. I do not even have to set up a network with xp; I
just plug into the router, which is connected to the dsl modem, and voila I
have a Local Area Connection.

When I disable the Local Area Connection and enable the wireless connection,
I have no trouble finding my wireless router signal and connecting to the
network. However, I get the limited or no connectivity popup when my
computer tries to aquire the network address.

When I click Repair connection, I get "cannot renew ip."

Any thoughts?

I forgot, my main reason for posting is that I cannot use the internet with
my wireless connection. I can only get it to work when I connect with the
cat 5 cable.

Did you check any of the settings on your router? Perhaps it does MAC filtering
by default.
Otherwise, it is hard to say anything without knowing the router's type.